Nikola has recently declared its filing for Chapter 11 bankruptcy, setting in motion plans to sell all or most of its assets. This move comes as the company has been battling a swift depletion of funds and difficulties in securing financial backing over the last several quarters.
The company’s decision marks the culmination of a turbulent period marked by frequent leadership changes, fluctuating sales, and a significant drop in stock value. During the pandemic, several electric vehicle companies, including Nikola, entered the public market with promises of significant industry transformation. However, due to diminishing demand and increased interest rates, many of these firms, like Fisker, Proterra, and Lordstown Motors, have found it hard to maintain their operations, leading to similar bankruptcy proceedings.
Nikola aims to manage an orderly wind-down by selling its assets, a move intended to maximize their value. Despite the bankruptcy filing, the company plans to continue operations for certain truck models already in the field and some hydrogen-fueling processes until the end of March. According to court filings, Nikola’s estimated assets range between $500 million and $1 billion, while its liabilities potentially span $1 billion to $10 billion.
Founded over a decade ago in Phoenix, Arizona, Nikola went public in mid-2020, delivering its first vehicle by the end of 2021. However, the company has faced significant legal and financial hurdles, especially following the October 2022 conviction of its founder, Trevor Milton. Milton was found guilty on charges of securities fraud and wire fraud, having allegedly provided misleading information about Nikola’s business operations through various media channels.
The allegations against Milton included falsely portraying the capabilities of the Nikola One prototype vehicle. Prosecutors argued that Milton falsely claimed the vehicle was fully functional when it lacked several key components, including motors and a control system. A video posted by Milton in 2018, showing the vehicle rolling down a hill unaided by power, was cited as an example of these deceptive practices. In 2023, Milton was sentenced to four years in prison for his actions.
In a bid to stabilize its future, Nikola appointed industry expert Stephen Girsky as CEO in August 2023. Girsky, a seasoned veteran with experience at Morgan Stanley and General Motors, became the company’s fourth CEO within four years. He played a crucial role in taking Nikola public through VectoIQ Acquisition Corp. Despite ramping up production of hydrogen-powered trucks in 2024, Nikola continued to struggle financially. High interest rates have deterred fleet operators from investing in necessary infrastructure, such as charging stations, which has further impacted sales.
Nikola’s bankruptcy filing highlights the ongoing struggles within the electric vehicle industry to secure sustainable funding and growth. As the company seeks to navigate its financial challenges through asset sales, the outcome remains uncertain for its stakeholders and the future of its innovative technologies.
