By on September 8, 2020

General Motors announced it will be taking an 11-percent stake in Nikola on Tuesday. It even said it would be actively helping the startup produce the hydrogen/battery-powered Badger pickup, sending the firm’s already-insane share price through the roof. Nikola shares were up 30 percent before the trading day even began, with the General seeing some positive changes in its own stock. Things only improved from there for both companies as news of the partnership continued to spread.

The deal is costing GM $2 billion and allots it one board member of its choosing in exchange for its manufacturing expertise.

“When we look at the opportunity to continue to leverage our technology — the Ultium battery platform system as well as the Hydrotec fuel cell technology — this is a wonderful validation of our technology, and then bringing our engineering and manufacturing expertise to the table,” GM CEO Mary Barra said in an interview on CNBC, adding that there would also be collaboration in regard to Nikola’s all-electric semi-trucks. “The teams have already begun discussions and there’s really good chemistry between the technical teams so we couldn’t be more excited about working with Nikola.”

Nikola founder and Executive Chairman Trevor Milton praised Detroit’s involvement. While tapping into GM’s manufacturing capabilities (and parts bin) will be a blessing for a company that’s vying to sell a physical product, Milton also noted that the EV startup will soon have direct access to GM’s hydrogen and Ultium battery technologies — both of which required billions in development funding to get where they are today.

“GM was very unique to us because they brought a lot more than just building the Badger,” Milton said. “It’s a perfect relationship. They’re one of the best purchasers, manufacturers, engineering houses in the entire planet.”

Since Nikola is currently more of a conceptual company than an established automaker, this really seems to work in its favor. It’s essentially lopping a fortune off its initial product development costs by bringing on a partner that’s already done the work. Meanwhile, GM gets a nice boost to its share price in an era where electric-vehicle startups seem to be wooing investors to a point that’s becoming downright ridiculous. We’ve not seen anything like this since suburban moms went ham on Beanie Babies in the 1990s.

From CNBC:

Analysts at Cowen said the deal is bigger than they anticipated an will allow Nikola to “leverage GM’s buying power for batteries and internal capabilities within fuel cells.”

“Additionally, the partnership represents a high-volume commercialization of GM’s Hydrotec fuel cells, which we believe is a positive leading indicator of continued adoption of fuel cell technology within heavy-duty transportation,” they wrote in a research note Tuesday.

Nikola began trading June 4 after a reverse merger with VectoIQ, which is a publicly traded special purpose acquisition company headed by former vice chairman of GM Stephen Girsky. The stock has taken off since its IPO despite the fact that Nikola, which was founded in 2015, doesn’t expect to generate revenue until 2021, and it shows the faith investors have in companies that promise vehicles of the future.

While there are loads of unanswered questions about how to make freight-focused EVs work without having to spend the entirety of their mass on energy storage, Nikola feels it is ready to lead the charge with a class-8 truck that’s totally reliant upon electricity next year. That model is supposed to be supported by other electric semis and their hydrogen-powered brethren by 2023.

Meanwhile, the Badger pickup is supposed to arrive in 2022. While the timing seems to suggest it could be assembled alongside the (Detroit) Hamtramck-based Hummer EV, we’ll have to wait for the companies to provide some sort of confirmation. For now, they’re only interested in praising the new partnership and getting investors hyped up.

[Image: Nikola]

 

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25 Comments on “GM Investing $2 Billion Into EV Startup Nikola...”


  • avatar
    slavuta

    Sounds like, “open a pizza parlor across”.

  • avatar
    dukeisduke

    So they’ll have access to lots of crappy Chinesium from GM? Sounds like a win. That pickup is too attractive – maybe GM can help them ugly it up.

  • avatar
    ttiguy

    “Meanwhile, the Badger pickup is supposed to arrive in 2022. While the timing seems to suggest it could be assembled alongside the (Detroit) Hamtramck-based Hummer EV, we’ll have to wait for the companies to provide some sort of confirmation.”

    I’ve got a Pro tip for ya little guy. It takes a whole lot longer than 1.5 years to tool up a factory to build a dissimilar product. If this were to be built in Dham (my money says its not), it wouldn’t be until 2024 at the earliest I bet.

    • 0 avatar
      highdesertcat

      ” the Badger pickup is supposed to arrive in 2022.”

      It’s vapor ware. All hype. No deliveries.

      Where is the Rivian truck that was hyped to be delivered in the summer of 2020?

      How many years was Tesla behind?

      I think that 2024 is overly optimistic, IF IT EVER REALLY GETS BUILT.

  • avatar
    SCE to AUX

    That’s $2 billion GM will never see again, just like Ford’s $1 billion and VW’s $2.6 billion investments into Argo AI for ‘mobility’.

    • 0 avatar
      NN

      $2bn seems to be the number GM likes to throw away from time to time. I remember when they paid Fiat $2bn to buy out of a merger option…in other words, $2bn for nothing. It seemed like big money back then. doesn’t even mean much anymore

    • 0 avatar
      1500cc

      GM is not investing cash (misleading headline nothwithstanding). They are providing their BEV & fuel cell technology and helping build the trucks, in exchange for a stake in Nikola valued at $2 billion.

      Seems like it could be a win for GM. They’ll be able to spread out their development costs among more units, and have a piece of a potential competitor in the marketplace, for little upfront cost.

      • 0 avatar
        highdesertcat

        “They are providing their BEV & fuel cell technology and helping build the trucks, in exchange for a stake in Nikola valued at $2 billion.”

        On their books, GM may carry it as a cash-investment outlay.

        As we all know, GM is genius at creative accounting and cash-value must be attached to “their BEV & fuel cell technology and helping build the trucks.”

        It is rare for plane loads of pallets of cash money to change hands as was given to Iran during the last administration.

        But it did happen to both GM and Fiatsler in 2009 when they received boatloads of cash money in the form of US Treasury checks.

        • 0 avatar
          Felix Hoenikker

          Mr Cat,
          Did not Ronald Raygun give pallets of cash to Iran in the form of guns and ammo to free the hostages as opposed to giving them back their money that was impounded by Jimmy Carter?

        • 0 avatar

          You mean “Basement” Joe? Now we have to call him “Helicopter”Joe. I did not know though that Iran was too big to fail. Of course we solved all problems at home and now have to bail out corrupted regimes in Iran and Ukraine. Right Joe? Right, now crawl back in your basement.

          • 0 avatar
            bd2

            Basement Joe would be a 100% improve on the Orange Bunker Inspector.

            Whom most of us already knew was a compulsive and serial LIAR (and a really dumb one at that since he lies about what he had stated in the past that was recorded), and know we know that he LIED repeatedly about the seriousness/threat of the coronavirus, including to younger people.

    • 0 avatar
      dwford

      $2b seems to be the price legacy Detroit automakers are willing to pay to get their picture taken with the latest cool kid from Silicon Valley.

      • 0 avatar
        bd2

        As already stated no outlay of cash.

        GM will now be manufacturing alternative powertrain vehicles for both Honda and Nikola with what are essentially GM components, so it gets the benefit of increasing economies of scale, as well as keeping the factories humming (plant capacity utilization is one of the biggest factors when it comes to profitability).

  • avatar
    Felix Hoenikker

    Just for argument, forget about EV pickup trucks. The idea of a fuel cell coupled to a battery makes a lot of sense for heavy duty trucks. The battery only has to be big enough to get the truck moving while the fuel cell comes on line. It would also soak up transient power needs during acceleration. Hydrogen makes a lot of sense for this application unlike for pick up trucks.
    The biggest advantage is the ability to refuel in the same time frame as a diesel truck. Second, the mass of the fuel cell power train is much lower than a battery. Since there is no carbon or NOx pollution, it is inherently a simpler drive train than a conventional diesel with after treatment. The whole thing comes down to operating cost, long term reliability and hydrogen storage. When a way to store hydrogen at non cryogenic conditions at higher densities is found, the idea of H2 powered personal vehicles (pick ups) becomes feasible.

  • avatar
    conundrum

    So this Badger pickup will be just a GM pickup EV with different styling. To tell the truth, since I have zero interest in all these EV shenanigans, I can’t remember what the USPs of all these EV startups are, one compared to the other. One of them has hub motors or something. But EVs are boring because who can get into rhapsodies about cells and electric motors? They’re impersonal and all about the same in the end. Yawn. the big excitement seems to be in how much hype can be generated to overvalue stocks. The products proposed are boring in and of themselves.

  • avatar
    dwford

    What kind of F’d up deal is this that GM PAYS another company to give them it’s own tech?! GM is PAYING Nikola to be allowed to sell them EV pickups that GM has to design and engineer themselves??? What is Nikola bringing to the table besides it’s name (which isn’t worth anything)?

    What have Nikola’s investors been investing in if Nikola is now outsourcing the entire Badger pickup to GM?

  • avatar
    ToolGuy

    Here’s a WSJ write-up (hit the little X in the top right corner of the “Continue reading” box and you should be able to read it):
    https://tinyurl.com/yxj46jxx

    Nikola to GM (paraphrasing): ‘You’re one of the best purchasers, manufacturers, engineering houses in the entire planet. Can you help us bring our new product to market as quickly and smoothly as you launched the new mid-engine Corvette?’

    GM to Nikola (paraphrasing): ‘Yes we can.’

    [Still pondering this announcement. But first reaction is, GM has all this amazing future-tech (we are told), and “engineering and manufacturing expertise” which they bring “to the table” but strangely, never to the showroom floor. GM gets the bump from the announcement and can now slow-walk a potential competitor (easier to sabotage Nikola when you have a board seat at Nikola).]

  • avatar

    This story is a little paraphrased. Nikola gave GM 11% (current value 2 billion)of their company and a seat on Nikola’s board. Not the other way around as stated in the article. This is not a liability on GM’s balance sheet it’s income for providing tech and building vehicles.

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