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Nov 30, 2020

GM scales back partnership with electric truck startup Nikola

Brendan Caldwell discusses Nikola


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General Motors Co. scaled back a partnership with clean-energy trucking startup Nikola Corp., scrapping a tentative deal to jointly build an electric pickup truck and replacing it with a non-binding deal to supply hydrogen-fuel technology.

Under terms of a non-binding memorandum of understanding announced Monday, GM will allow Nikola to use its hydrogen fuel-cell technology in planned semi trucks. The agreement doesn’t include GM taking an equity stake in Nikola, unlike a deal proposed in September, and also drops plans for GM to manufacture a battery-powered pickup for Nikola called the Badger.

Shares of Nikola initially spiked on word of an agreement in premarket trading, but then fell as low as 6.2 per cent to US$26.20.

The deal comes ahead of a Dec. 3 deadline and ends months of speculation over GM’s commitment to the Phoenix-based company after a short seller report cast doubts on Nikola’s ability to deliver on promises and its transparency with investors. The allegations of deception hammered the once high-flying stock, prompted the resignation of founder Trevor Milton and forced GM to reconsider terms of the initial agreement.