Nikola Motors partners with GM for electric trucks
General Motors is teaming up with Nikola Motors, a Phoenix-based manufacturer that plans to launch a mix of full-size pickup trucks and heavy-duty trucks starting late next year.
In a deal that will give GM a $ 2 billion investment in the startup, the Detroit automaker will supply Nikola with the new Hydrotec fuel cell technology and Ultium batteries it has developed and will also manufacture. The Nikola Badger Zero Emission Pickup Truck Set. will hit the market in 2021. Trevor Milton, founder and CEO of Nikola, estimated the deal would save his company at least $ 4 billion.
“You can’t ask for a better partnership than this,” Milton said Tuesday at a joint press conference with GM CEO Mary Barra. Nikola shares climbed more than 50% after the deal was announced.
Nikola, who is one of an assortment of startups hoping to capitalize on the industry’s burgeoning shift from conventional gasoline and diesel vehicles to zero-emission technologies, came under the microscope earlier this year when it turned out. that the company had received a loan of $ 4 million. of the Paycheque Protection Program. Commonly known as PPP, the emergency relief fund was supposed to be used by small businesses affected by the coronavirus to help support their payrolls.
Despite the fact that Nikola had just gone public and had a market cap of billions, Milton initially refused to repay the funding, saying the company was “in pre-income” as its first product was still more than a year from production. “There is a difference between high valuation and having cash,” he said in an interview with CNBC in April.
Nikola, however, quietly returned the full $ 4 million in late April, according to the Securities and Exchange Commission.
When the company was launched in 2014, it focused on using hydrogen fuel cells to power semi-trailers. It now plans to offer customers various options and has entered the larger mainstream automotive market with the addition of a zero-emission pickup, the Badger.
When Nikola formed a partnership with a so-called blank check, or SPAC company, and went public earlier this year, he warned he didn’t have the resources to do it all on his own and would like to find a partner to help him.
“This deal with GM means they don’t need to build a factory, they don’t need to build a platform, they don’t need to build the batteries or the fuel cells. They just turn the body and interior design over to GM and say ‘build this thing,’ said Sam Abuelsamid, senior automotive analyst at Navigant Research.
But Nikola is not the only one to benefit from the deal, added Abuelsamid. “For GM, this gives them economies of scale and allows them to increase the capacity utilization of the assembly plant and battery plants. And that gives them a potentially important customer for their fuel cells.
First developed almost 150 years ago, fuel cells take oxygen from the air and hydrogen gas, combining them in a device called a cell. This creates a supply of electricity and water vapor. Fuel cells helped power the Apollo lunar mission capsules and have many uses, including backup power for cell phone towers.
Two years ago, GM formed a joint venture with Honda to develop the Hydrotec system. The Japanese automaker plans to use the technology in future versions of its Clarion fuel cell vehicle. GM plans to commercialize stationary systems and is working with the Pentagon on possible military applications. CEO Barra said on Tuesday that the automaker is also “evaluating” its own possible applications for vehicles.
In addition, GM has partnered with South Korean LG Chem to develop a new line of high-performance batteries, Ultium cells, which are due to go into production at a new plant near Lordstown, Ohio. It will use them for “20 or more” battery-electric vehicles slated for release by 2023, the companies said. Ultium cells are intended to deliver more power, charge faster, and dramatically lower the cost compared to the batteries the automaker uses today.
There has been a long-standing debate between proponents of hydrogen and batteries, with Tesla CEO Elon Musk calling fuel cells “dumb cells.” But hydrogen-powered vehicles can store enough fuel to provide significantly longer range than current batteries. That is, of course, if you can find the light gas. Currently, fewer than 100 hydrogen pumps are open to the public in the United States, according to federal data.
Nikola has announced plans to build its own refueling network on key routes its semi-trailer customers plan to serve. But, for now, sales of fuel cell vehicles such as the Honda Clarion, Toyota Mirai, and Hyundai Nexo are limited to areas where gasoline is readily available.
CORRECTION (September 9, 2020, 5:05 p.m. ET): A previous version of this article mischaracterized how Nikola Motors handled a loan from the Federal Paycheck Protection Program. He repaid the entire $ 4 million loan in April, according to the Securities and Exchange Commission, after initially saying he would not.