Troubled hydrogen truck maker Nikola has filed for Chapter 11 bankruptcy protection, months after saying that it would likely run out of cash early this year. Nikola was a hot startup and rising star on Wall Street before becoming enmeshed in scandal and seeing its founder convicted in 2022 for misleading investors about the Arizona company's technology. At the trial of founder Trevor Milton, prosecutors said a company video of a prototype truck that appeared to be driven down a desert highway was actually a video of a nonfunctioning Nikola that had been rolled down a hill, reports the AP. But the hype around the company was immense. In 2020, Nikola was valued at around $30 billion, exceeding the market capitalization of Ford Motor Co.
As the Wall Street Journal puts it, "Nikola came to symbolize the excesses of the green-auto investment boom. It went public in 2020 without having sold a single truck." But Milton resigned that same year amid reports of fraud that sent Nikola's stock prices into a tailspin. He was sentenced to four years in prison in December 2023 after being convicted of exaggerating claims about his company's production of zero-emission 18-wheel trucks, leading to sizable losses for investors. Prosecutors said Milton falsely claimed Nikola had built its own revolutionary truck that was actually a General Motors product with Nikola's logo stamped onto it. Called as a government witness, Nikola CEO Steve Girsky testified that Milton "was prone to exaggeration" when pitching his venture to investors.
Nikola filed for protection in the United States Bankruptcy Court for the District of Delaware and said Wednesday that it has also filed a motion seeking approval to pursue an auction and sale of the business. The company has about $47 million in cash on hand and plans to continue limited service and support operations for vehicles on the road, including fueling operations through the end of March, subject to court approval. The company said that it will need to raise more funding to support those types of activities after that time. Per the filing, Nikola has lost $3.6 billion in invested capital.
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"Like other companies in the electric-vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate," Girsky said in a statement. The executive said the company has made efforts in recent months to raise funds, reduce liabilities, and preserve cash, but that it hasn't been enough. Shares of Nikola, based in Phoenix, Arizona, are currently trading down 38% at $0.48; at their June 2020 peak, the share price reached nearly $2,000. The Journal notes Nikola now joins these other belly-up green auto companies: Fisker Automotive, Lordstown Motors, and Electric Last Mile Solutions. (More Nikola stories.)
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