GM agrees to build Nikola’s electric pickup, buy US$2 billion stake in startup
|driving.ca 08 Sep 2020 at 11:03|
General Motors took a US$2-billion equity stake in startup Nikola Corp., agreeing to manufacture its Badger electric-pickup model and diversifying the Detroit-based automaker’s alternate-fuel vehicle strategy.
GM will make in-kind contributions to take an 11-per-cent stake in Nikola and get the right to nominate one director to the company’s board, according to a statement.
The two companies expect the truck to start production by the end of 2022.
The partnership gives Nikola – which has yet to generate any meaningful revenue – an immediate boost of legitimacy and the industrial might of an established player, while also benefiting GM. The well-established automaker expects to receive more than US$4 billion in perks from the deal. In addition to the equity value of the shares, it will be paid to manufacture the Badger, supply batteries and begin commercializing fuel-cell technology for the semi-truck industry.
GM is increasing its exposure to alternate-fuel vehicles, an area that increasingly has captured the attention of investors. The Badger truck could compete against GM’s own electrification plans for future vehicles such as a promised Hummer pickup that goes on sales late next year. The carmaker also may see it as a way to test demand for battery-powered trucks.
In addition, GM gets to keep 80 per cent of the electric-vehicle regulatory credits from sales of the Badger pickup and has right of first refusal on the other 20 per cent. That will help the automaker meet emissions regulations even as it focuses on profitable gas-powered sport utility vehicles and trucks.
Nikola wants to work with Hyundai on hydrogen, keeps getting shot down
For Nikola, the partnership with GM is a vindication of its efforts to gain credibility as it moves toward production of its first vehicles. The Phoenix-based company engineered a reverse merger in June, gaining a public listing and more notice for its ambitious plans to enter the market for battery-powered and fuel-cell vehicles.
It has garnered its share of fans and skeptics, who founder Trevor Milton has been known to engage with on Twitter, where he has promoted the company and sought to quell critics.
Milton, who also is Nikola’s chairman, has said the Badger will sell for between US$60,000 and US$90,000, which analysts say could be a profitable niche in the larger U.S. pickup market. He also has said he hopes the Badger will one day rival Ford’s F-150, which for 43 years has been America’s best-selling pickup.
Nikola will save an estimated $4 billion in development costs by partnering with GM, Milton said in a tweet Tuesday. “Who better than GM to help engineer, validate, test and manufacture,” he said.
The 2020 Nikola Badger electric pickup Nikola
As recently as a year ago, Nikola had no plans to build a pickup, just an idea that gelled in November after Tesla unveiled a prototype of its own futuristic electric truck. Nikola first unveiled the Badger in February and started to take pre-orders from buyers in June.
Nikola’s not alone in targeting pickup buyers with a more-sustainable option. Rivian Automotive, an EV startup backed by Amazon.com and Ford, plans to start producing an electric pickup by June 2021. Ford promises an electric F-150 by 2022, and Fiat Chrysler Automobiles has said it is mulling an electrified version of its Ram pickup.