After more than a decade in the electric vehicle (EV) business, it seems to be the end of the road for electric truck maker Nikola Corporation, which has just filed for Chapter 11 Bankruptcy protection.
Specifically, Nikola announced that it had filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, as per the company’s press release published on February 19.
Additionally, it stated it had filed a motion seeking authorization to pursue an auction and sale process under Section 363 of the U.S. Bankruptcy Code.
This way, Nikola’s dreams of dominating and revolutionizing the electric truck industry with its zero-emissions transportation, energy supply, and infrastructure solutions crashed and burned, marking the culmination of uncertainties amid significant challenges.
In the words of its CEO, Steve Girsky:
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate. In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet, and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the Company and its stakeholders.”
Neverending rough patch for Nikola
As a reminder, Nikola went public on June 4, 2020, through a merger with VectoIQ Acquisition Corp, but it soon faced serious allegations of fraud, leading to investigations by the regulators, as well as the resignation of Trevor Milton as executive chairman.
In 2021, the company had to pay $125 million to settle a civil case against it by the Securities and Exchange Commission (SEC), arguing no wrongdoing.
Two years later, Milton received a four-year prison sentence for exaggerating claims about Nikola’s production of a zero-emission 18-wheeler which was actually a General Motors product with Nikola’s logo stamped onto it, resulting in substantial losses for investors.
Testifying as a government witness at the trial, Nikola’s CEO said at the time that Milton “was prone to exaggeration” in pitching his venture to investors.
Several months ago, the company said it would likely run out of cash early this year, and this has come true. It currently has about $47 million in cash on hand to fund its foregoing activities, implement the post-petition sale process, and exit Chapter 11.
Nikola plans to continue limited service and support operations for vehicles on the road, including fueling operations until the end of March, depending on court approval. It also said that it would need to raise more funding to support those types of activities beyond said date.
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