Nikola, an electric vehicle start-up that received federal funding during the Biden administration, said it filed for Chapter 11 bankruptcy Wednesday and will pursue a sale of most or all of its assets.
The company, once a Wall Street darling valued at $30 billion, announced the bankruptcy after several quarters of rapid cash burn and waning investor interest. Nikola also suffered from chronic leadership changes after its founder and original CEO, Trevor Milton, was convicted of fraud in 2022. The long-haul electric truck manufacturer produced only 600 vehicles since its founding in 2014, according to CNBC News, despite receiving subsidies from the Biden administration’s Department of Energy (DOE).
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” Steve Girsky, Nikola’s current CEO, wrote in the announcement. “In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges.”
The EPA announced a $2.8 billion investment through its Clean Ports Program to support zero-emissions port equipment and infrastructure. This transformative funding is set to reduce environmental impact and drive sustainable growth in port cities across the U.S. Several states…
— Nikola Corporation (@nikolamotor) January 13, 2025
Nikola’s failure comes after a short-lived period of investor infatuation during the height of the COVID pandemic.
The company attracted high-profile investors ranging from Fidelity to General Motors, whose $2 billion investment in 2020 constituted an 11% stake in the company. The broad enthusiasm for the firm’s hydrogen and electricity-powered semi trucks, along with various state and federal climate vouchers that effectively reduced the cost of the trucks, resulted in Nikola’s valuation rocketing to $30 billion in June 2020 — more valuable than Ford Motor Company.
Nikola said it has only $47 million in on-hand cash as of Wednesday.
The electric vehicle company benefitted from multiple federal and state government programs. Aside from its $1.4 million contract with former President Joe Biden’s DOE, businesses that bought a truck from Nikola’s reported fleet of 600 vehicles — many of which were recalled — were eligible for a $40,000 tax credit from the Internal Revenue Service (IRS). Nikola also benefitted from California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), which offered Nikola buyers a $120,000 voucher per electric truck. For Nikola’s hydrogen fuel cell electric vehicles, the voucher increased to $240,000 per truck.
Nikola fell out of Wall Street’s good graces after a series of public blunders, most prominently after the company released a now-deleted video showing the semi truck moving rapidly along a desert highway. In September 2020, two years after Nikola uploaded the video, investment firm Hindenburg Research released a report revealing the truck wasn’t functional at all — the company later admitted it had towed the motorless truck chassis up a shallow hill and filmed it rolling down. The revelation sent Nikola’s stock tumbling, ultimately losing 50% of its value by the end of September 2020.
Milton, the company’s founder, was sentenced in 2023 to four years in federal prison for defrauding investors. The company’s stock plunged 40% after market open Wednesday, and by over 95% over the past 12 months.
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