By on October 2, 2020

General Motors is understandably considering revisions to its deal with Nikola Corp following the recent hullabaloo that tanked the startup’s stock. Allegations had surfaced that founder Trevor Milton had misled investors by promising technologies that did not yet exist, forcing him to leave Nikola’s ranks right around the time the Securities and Exchange Commission decided to get involved.

Obviously, critics said this made GM look as though it was run by morons. Last month, the Detroit automaker agreed to take an 11 percent stake in Nikola while also planning to build its all-electric Badger pickup and sharing its hydrogen tech to help spur development. But it seems as though this was being done on little more than Milton’s word that Nikola was the real deal. General Motors does not appear to have done its due diligence in vetting the company’s true capabilities. While the obvious remedy would seem to be to distance itself from the now-tainted brand, GM is actually rumored to be considering expanding its interests in Nikola now that its share price has declined.

Both CNBC and Bloomberg claimed unnamed insider sources have told them GM may very well try and take a larger slice of the startup and was in the process of renegotiation its initial deal. While that seems rather foolish if the company was selling itself under false pretenses, Nikola has adamantly denied it misled investors as it simultaneously canceled an important conference to showcase what it’s been working on.

From Bloomberg:

Since the deal was announced on Sept. 8, Nikola stock has fallen by more than half and GM has sought better terms before closing, said the people, who asked not to be identified because the discussions are private. GM could push to raise its equity in Nikola beyond the planned 11 [percent] or seek warrants that would guarantee or even increase that level of ownership if the company raises more money.

GM’s due diligence on the startup has been questioned after a short seller accused Nikola of overstating its capabilities and know-how. The allegations  and federal regulatory probes into those claims  sent the Phoenix-based company’s stock price into a downward spiral. Nikola has denied the allegations against it and Trevor Milton, the company’s founder and former chairman.

The SEC has since gotten involved, which short-seller Hindenburg said was a great idea after it successfully impacted Nikola’s stock. While its ultimate goal was to expose the company for its alleged deception, Hindenburg said it had hoped to profit from the actions taken. Meanwhile, Nikola doesn’t seem all that perturbed that it will be placed under a microscope.

“Nikola has contacted and briefed the U.S. Securities and Exchange Commission regarding Nikola’s concerns pertaining to the Hindenburg report,” the company said last month. “Nikola intends to fully cooperate with the SEC regarding its inquiry into these matters.”

Meanwhile, Nikola named Steve Shindler to its board on Thursday as a replacement for Lonnie Stalsberg this week. Shindler has served as the managing partner of VectoIQ LLC, the acquisitions company that arranged for Nikola to go public through a reverse merger, through June of 2020. Interestingly, VectoIQ was run by Stephen Girsk  a former vice chairman of General Motors who now serves as the chair of Nikola’s board. He runs several “emerging technology” firms, was instrumental in helping broker the partnership between the two companies, and presumably has some idea why GM was so keen to get a piece of the action.

[Image: Phil K/Shutterstock]

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25 Comments on “GM Considers MORE Nikola Stock?...”

  • avatar

    Gotta keep the Ponzi scheme going.

  • avatar

    If GM has money to buy Nikola stock (hard to type that without laughing), they have money to end all subsidy tax programs they have underway for any R&D.

  • avatar
    SCE to AUX

    “Since the deal was announced on Sept. 8, Nikola stock has fallen by more than half”

    There’s the answer. *If* Nikola has anything worthwhile to offer, GM can now get more of it at a discount.

    But TTAC is that GM should run away from Nikola.

    • 0 avatar
      Matt Posky

      I wouldn’t buy something at a reduced rate if I found out it didn’t actually exist. The only thing GM seems to be getting here is a name to sell EVs under that’s since been tainted by increasingly bizarre antics.

      • 0 avatar

        They’re not buying anything though. Nikola is paying THEM with stock/equity. And GM, seeing that the value of that stock is dropping is asking for more to make up the difference.

        • 0 avatar

          GM, embarrassed about their terrible decision, acts like Nikola has much more to offer than they do, so, in order to make it look this is actually a really good company, they publicly and loudly continue investing in the company.
          The Chinese, with more money than they know what to do with, arrange a hostile takeover with the help of some shady New York City Wall Street types.
          GM sells out at a huge profit, and the Chinese end up with a pig in a poke. They won’t let on that they got gypped, what with having to save face and all, but suddenly, one after another, GM executives start dying in strange and mysterious circumstances…

    • 0 avatar

      They do have something worthwhile to offer, the ability to sell vehicles with the federal tax credit and a name that has been in the EV news, even if it has recently been negative.

      I also don’t see it as them buying more as much as it is that they have determined the value they are bringing to the table and they want an appropriate level of equity based on that. In other words they want $X worth of stock and since the stock price has dropped the number of shares and ownership percentage needs to go up.

      • 0 avatar

        Yeah but I’m guess access to $7500 tax credit for 200,000 sales (1.5BUSD) is not worth the investment. Really only a fraction of that amount. And if GM whitely owns this dumpster fire, would they get anything for it? If their tech if fake they have nothing and they’re worth zero. Less than zero actually.

        • 0 avatar

          It’s not the consumer tax credits they are after. It’s the ZEV credits that Nikola gets out of thin air and can sell for billions.

          Think about it. If GM gets some ZEV credits for building the Bolt, they are immediately chewed up by their trucks and the rest of their lineup. They need more credits to offset their ZEV liability to sell cars in the important ZEV states, namely California.

          If GM decides to build EVs for Nikola, even at a loss, they just gave themselves pure margin credits to sell themselves from a different name. With 100k EV trucks sold each year that may be just enough to avoid the fines from GM’s non-compliance, which buys them time to R&D better EVs of their own.

          I imagine this math is where GM actually DID their due diligence. Perhaps they missed the fact that Nikola only had vaporware to sell.

          • 0 avatar

            Considering that the deal calls for GM to DESIGN AND BUILD the Badger pickup, surely that means GM knows Nikola had no tech. Meaning your idea that they are after the ZEV credits makes sense.

          • 0 avatar

            Well it isn’t just 200k units, that is when it begins to phase out. The ZEV credits will be there whether the truck wears a GM or Nikola badge.

            Note the name of the truck Badger, and that is what GM brings to the party a truck to re-badge. So the fact is all GM has to do is whip up some badges a few unique pieces for the GMC Hummer EV.

          • 0 avatar

            @Scout, yes if GM moves forward its all but guaranteed the Badger would be a rebadged Hummer EV. Good point. If they see incremental volume from having two brands selling same product instead of one, it sounds even more like a ZEV credit story. An extra 50k units per year of pure electric is worth hundreds of millions to Tesla, same could apply to GM.

  • avatar

    “‘Nikola has contacted and briefed the U.S. Securities and Exchange Commission regarding Nikola’s concerns pertaining to the Hindenburg report,” the company said last month. ‘Nikola intends to fully cooperate with the SEC regarding its inquiry into these matters.\'”

    Coming from the company that rolled an engineless truck down a hill and published the video to the investing world as showing “the Nikola One in motion,” that’s pretty rich.

    Nikola’s attempt to spin the situation notwithstanding, somehow I doubt that Hindenburg is the focus of the SEC’s attention.

  • avatar

    Looks like my guess was right, at least in part. I’m guessing GM will end up fully acquiring Nikola and bring it in as another corporate brand specifically for the EV space. Considering GM’s own fuel cell work in their Chevy trucks for the US military, it doesn’t look like it would be too difficult for them to merge the efforts and offer some more appealing products than their current ICEV lineup. Certainly GM’s trucks need a lot of work on their appearance and their comfort levels (though I’m quite happy with my Colorado, which looks a bloomin’ sight better than the rest of their trucks.)

    • 0 avatar
      Matt Posky

      300 IQ play with the Colorado. It seems the superior mid-sized choice and everyone who owns one seems to love it. Sierra and Silverado owners seem to be kicking themselves for not going with FCA or Ford though.

  • avatar

    Enough of the financial analysis out there pointing at GM not really putting up anything into this “partnership” and getting more of Nikola for the same nothing can make sense in the context similar to what Vulpine suggested.

  • avatar

    Is Mary Barra suffering from dementia? I’ll bet she also answers those phone calls from “Amazon” warning her that she needs to refuse a $1000 package about to be delivered. Somebody put her in a home!

  • avatar

    “GM look as though it was run by morons”

    Who are Morons? Is it the religious sect?

    The thing is that if GM designs electric trucks under its own name GM stock will not rise to stratosphere (well it will not rise at all) like it would if it does it via Nikola. Nikola image costs a lot of money because… Nikola is just another name of Tesla and anything Tesla worth hundreds of billions $$.

  • avatar

    The main question does Nikola have at least a few vehicles which actually run. Yugo’s were terrible vehicles, but at least they has an engines that ran. Is Nikola even a legitimate manufacturer?

  • avatar
    Michael S6

    Getting twice of nothing (Nikola stock) is still worth nothing.

  • avatar

    GM NEVER admits mistakes, unless it is in front of a Senate Committee to save their butt. They, GM executives, are a bunch of overpaid, unqualified clowns. The GM business is in steady decline, despite “cost saving initiatives/opportunities” which screwed suppliers, customers, employees, dealers, the American people; all of it. GM cannot fix itself. Any employee who has common sense is gone from that culture through many means. The stock price proves it. GM is headed for bankruptcy #2.

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