Nikola Deception: Company Overview

Nikola Deception

• Nikola Motor Company founder Trevor Milton presented a prototype of the Nikola One truck in December 2016, claiming it was fully functional.
• However, Nikola later admitted the truck never functioned fully, instead opting to prioritize the production of the Nikola Two.
• The Nikola One's ability to function or not is irrelevant to the company, as they now possess a functional prototype of the Nikola Two.
• Nikola One was used to raise funds, which in turn were used to hire experienced companies like Bosch and Iveco, to help design and build subsequent vehicles.
• Nikola also claimed to have found a way to reduce the cost of hydrogen fuel to 4perkilogramfromtheregularpriceof4 per kilogram from the regular price of 4perkilogramfromtheregularpriceof16, which would allow them to create a network of hydrogen refueling stations similar to Tesla's Supercharger network, but provided little evidence to back up this claim.
• Trevor Milton, the company's founder and former CEO, has been sentenced to four years in prison and ordered to pay a $1 million fine for misleading investors about the company's technology.
• Milton was accused of staging a video to make it appear as if the Nikola One was driving independently when it was actually rolling downhill.
• The company's stock is currently trading at less than $1 a share.
• General Motors canceled a planned equity deal with Nikola following the revelation.
• Nikola has since scaled back its ambitions, shutting down work on its electric ATV and motorboat, costing the company $14 million.

Trevor Milton

• Trevor Milton claimed that his resignation from Nikola was not due to fraud allegations but because of his wife's illness.
• He also claimed to be a quarter Cherokee and gave an emotional recounting of "ethnic cleansing" against the tribe during his sentencing hearing.

Nikola One Truck

• Nikola Motor Company founder Trevor Milton unveiled a prototype of the Nikola One truck in December 2016, portraying it as fully functional.
• Nikola admitted that the Nikola One truck never got to fully function.
• Nikola pivoted to working on its next vehicle, the Nikola Two.
• Nikola's investors knew the technical capability of the Nikola One at the time of their investment.
• The functionality of the Nikola One truck is irrelevant as Nikola now has a functional prototype of the Nikola Two.
• Milton claimed the Nikola One truck was fully functional and worked.
• Nikola used the hype around the Nikola One to raise funds.

Hydrogen Fuel Costs

• Nikola claimed to have figured out how to cut the cost of hydrogen fuel to below $4 per kilogram.
• The current market price of hydrogen fuel is around $16 per kilogram.
• That could enable Nikola to build a network of hydrogen filling stations similar to Tesla's SuperCharger network.
• There was little evidence to back up the claim.

Trevor Milton Sentencing

• Milton was sentenced to four years in prison after a jury found him guilty of misleading investors about the company’s technology.
• Milton was also ordered to pay a $1 million fine.
• Milton was found guilty of staging a video showing the Nikola One semi driving under its own power, while it was actually rolling downhill.

Fallout from the Report

• GM backed out of the equity deal with Nikola.
• Nikola halted work on its electric ATV and motorboat, costing the company $14 million.
• Nikola's stock is now trading for less than $1 a share.