Electric Truck Maker Nikola Goes Bankrupt Following Founder's Arrest and Fraud Allegations

The company, founded in 2015, is now looking to wind down operations as its market valuation has collapsed from $27 billion to under $50 million. For the past few years, Nikola braved several top management changes, plummeting share values, fraud allegations, a massive drop in demand, and recalls.

Nikola, like Fisker, Proterra, Canoo, and Lordstown Motors, went public during the pandemic on a wave of such listings and started delivering its first trucks in 2021. All five startups filed for bankruptcy in recent years, failing to revolutionize their sectors as originally planned.

Five years ago, Nikola was making plans with General Motors to engineer and manufacture the auto giant's battery-electric and hydrogen fuel cell vehicles, including the Nikola Badger. The pickup truck was expected to hit the market with over 900 horsepower and a claimed driving range of up to 600 miles. However, the model died even before it was born.

In February 2024, Nikola sold the project to a then-new company, Embr Motors, founded by vehicle builder and TV personality Dave "Heavy D" Sparks. This was a blow for the company, which was originally planning to transform the polluting heavy-truck industry into one with zero tailpipe emissions. The first red flag showed up when Hindenburg Research published a video showing the truck rolling down a hill to simulate driving and a report accusing Nikola of fraud.

Founder Trevor Milton was charged with fraud for staging the video and falsely claiming his company produced its own hydrogen fuel cells at below-market rates and sentenced to four years in prison. Following Trevor Milton's arrest, GM backed out of the deal.

Nikola ramped up production in 2024, but it was bleeding money as it was losing hundreds of dollars on every truck it sold. Since the third quarter of last year, it has produced and delivered only 600 vehicles, most of which were recalled for various factory faults.

Nikola's next step is to set up an auction and sale process. The move is pending court approval. The electric truck maker has $47 million in cash to fund the bankruptcy proceedings, implement the sale process, and exit Chapter 11.

The startup listed assets rated between $500 million and $1 billion, while Reuters reports citing a court filing that Nikola estimated its liabilities between $1 billion and $10 billion.

President and CEO Steve Girsky says that, in recent months, Nikola has been trying to raise capital, reduce liabilities, and preserve cash to sustain its operations. Despite all efforts, the company was unable to overcome the challenges, which led to the Board's decision to file for Chapter 11.