Shortly after announcing the deal with GM, short-selling firm Hindenburg Research revealed that Nikola founder Trevor Milton was not telling the truth at a 2016 event when he claimed that the Nikola One truck on stage was “working fully”. Nikola now admits that the truck never worked and that a promotional video of the truck was made rolling it up a hill.
Nikola argued that this was old news because Nikola no longer markets the Nikola One and has a working prototype of the Nikola Two. But the revelations plunged the company into chaos and forced Milton to resign on Sunday.
Why Nikola needs hydrogen refueling stations
According to the Wall Street Journal, the Hindenburg revelations made it harder for Nikola to seek help in building a planned network of hydrogen refueling stations. The company has already reached an agreement to use Nel electrolysers to generate hydrogen and had been in talks with several companies – including BP and other energy producers, “industrial gas companies” and “gas operators”. roadhouse ‘- to handle the logistical details help build and operate stations. According to the Journal, “Nikola’s leaders felt that they were making progress” towards signing an agreement, but “the conclusion of this agreement was put on hold” after the Hindenburg report. The Journal acknowledges that “an agreement could still be reached”.
These service stations are an integral part of Nikola’s business strategy. Instead of selling semi-trailers outright, Nikola’s plan is to rent them at a flat rate per kilometer covering fuel and maintenance. This reduces the risk that customers have to assume with unproven technology. But the plan won’t work if Nikola doesn’t have operational gas stations by the time its hydrogen-powered semi-trailers start rolling off the assembly line – which is currently slated for 2023.
Nikola has long sought to partner with companies that already have the technology Nikola needs. Nikola has taken this approach to the extreme in the deal with GM; GM is supposed to both design and manufacture Nikola’s Badger trucks, which will be based on GM’s battery and hydrogen cell technologies. Nikola has made similar deals with other companies, including Iveco and Bosch, to help him design or build his semi-trailers.
In short, a big part of Nikola’s strategy so far has been to fix the issues by pumping money into them. Until recently, the hype surrounding Nikola made fundraising easier.
But the company may now be entering an era of heightened investor skepticism. It could force Nikola to tighten up and do more with less. If that happens, we’ll find out if Nikola can achieve his lofty goals without relying so much on high-paying partners.