It’s been a wild ride for Nikola over the last two years: from the high of a pickup truck partnership with GM to the revelation it had lied about its technology and products.
Overnight the electric truck maker settled a civil suit brought by the US Securities and Exchange Commission (SEC), which claimed Nikola had “defrauded investors by misleading them about its products, technical advancements, and commercial prospects”.
This includes claims in 2015 by founder and former CEO Trevor Milton that the company had built a working prototype of its One hydrogen fuel-cell semi when it had no motors.
Nikola went public via a backdoor method in March 2020 by merging with an already-listed special purpose acquisition company (SPAC).
At the launch of the Badger pickup in June 2020, Milton said it was a “fully functioning” vehicle with 700 miles (1125km) of range. He claimed the car on stage was not one of the “pushers everyone puts out there as a fake vehicle to show everyone what they’re doing” when the Badger was, in fact, a pusher built on a Ford F-150 frame.
The launch of the Badger sent the company’s share price soaring from around US$10.80 when it went public to US$65.90 a few days after the Badger’s unveiling.
The company then signed a partnership with GM to build, engineer and produce the vehicle. GM backed out of the deal when revelations about Nikola’s lies went public, Milton left the startup automaker, and Nikola pledged to refocus on developing hydrogen fuel-cell trucks.
According to the SEC, the ousted CEO “misled investors” regarding the company’s “in-house production capabilities, hydrogen production, truck reservations and orders, and financial outlook”.
Nikola also “misled investors by misrepresenting or omitting material facts about the refueling time of its prototype vehicles, the status of its headquarters’ hydrogen station, [and] the anticipated cost and sources of electricity for its planned hydrogen production”.
As part of the agreement, Nikola neither admits nor denies the SEC’s allegations, but has agreed to pay US$125 million ($174 million) into an investor compensation fund over the next two years.
The truck maker has also pledged to “cease and desist from future violations” of the same nature, as well as “certain voluntary undertakings”.
Nikola says it “has taken action to seek reimbursement from its founder, Trevor Milton, for costs and damages in connection with the government and regulatory investigations”.
Milton is being sued by the SEC, and has charged with criminal offences by US federal attorneys. If found guilty, Milton could be forced to pay back millions of dollars, and may spend up to 25 years in jail.