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The Nikola electric truck manufacturer has little impulse. But at least the modest amount of propulsion it has is real this time.
The Arizona -based company infamously pretended a promotional video to demonstrate that its hydrogen truck engine was functional. In fact, the vehicle was using gravity to roll downhill. The short seller Hindenburg Research discovered this, and finally also did the United States Department of Justice. The founder of Nikola, Trevor Milton, will turn four years in prison for fraud of values for pretending the company’s perspectives.
Nikola did not collapse immediately after Milton’s legal problems. His trucks with hydrogen fuel cells were very well marketed, along with conventional battery trucks. But like many other clean energy concepts that raised hundreds of millions in capital during the rise of the pandemic, the company’s operational skills could not match the exaggeration of marketing.
The deliveries of an estimate of 350 last year, for example, are well below the promise of thousands of trucks for 2025 that Nikola made when it was made public in 2020, merging with a special purpose acquisition company. Your gross margin remains deeply negative. And Nikola’s cash burn of $ 150 million per quarter could soon force the company to restructure its debt, either in a bankruptcy court or out of bankruptcy, the FT reported.
Despite all this, Nikola deserves credit to prove something difficult: hydrogen technology. Hydrogen fed vehicles take only a few minutes to feed. The use of hydrogen to generate electricity through a fuel cell on board also means that vehicles can have much more energy ready for any given weight than they can put in an EV with battery.
That makes technology potentially useful for heavy and long distance transport, precisely the technical challenge that Nikola has assumed. Difficulties abound, of course. Among other problems, hydrogen feed infrastructure for passenger vehicles has really been built only in California.
The current Nikola CEO, Steve Gorsky, has credibility and experience in the industry. He is a former Executive of General Motors who had directed the SPAC agreement. And the company was hope that an ecosystem in which both private companies and government policy prioritize hydrogen power would create the conditions for Nikola to prosper.
As things are, time is running out. Nikola finished the third quarter with less than $ 200mn liquidity. Its debt balance is located in the hundreds of millions of dollars, while its market capitalization, once it approaches $ 30 billion, has withered only $ 60mn.
Assuming that creditors finally take care of the company, the question is whether Nikola is stripped for pieces, such as its intellectual property or reorganizes as an independent business. In this case, at least there seems to be something worth saving. Nikola’s bet on hydrogen is different from new automatic companies that cover the side of the road.