Nikola Corp. is dialing back projected output of its first commercial zero-emission vehicles and said an internal review of claims about its technology concluded the startup and its founder made several inaccurate statements — marking a break with the company’s previous denials of misleading communications with the public.
The EV maker’s probe found nine statements made by the company and its founder and former chairman, Trevor Milton, were wholly or partially inaccurate, according to a regulatory filing made public Thursday.
Nikola commissioned the law firm Kirkland & Ellis to conduct the review after a short seller’s report in September accused the company and its founder of misleading investors. The startup had repeatedly denied the allegations against it and Milton, who stepped down shortly after short seller Hindenburg Research published the report and the company’s share price plummeted.
The accusations prompted inquiries by the U.S. Securities and Exchange Commission and Justice Department. Nikola has said it is cooperating with regulators in those investigations.
A company spokesperson declined to comment beyond what was stated in the filing. A representative for Milton, who remains the single largest shareholder in Nikola with a stake of around 22 percent, also declined to comment.
Details about the probe were first reported earlier by the Financial Times.
Scaled down plans
In another disclosure, the startup said Thursday it now expects to deliver 100 battery-electric Tre semis to customers this year, down from a previous target of 600. It blamed the global pandemic and supply-chain issues for the drop in planned production volumes.
“We see pent-up demand hitting the supply chain, creating global critical parts shortages for components” such as display screens and batteries, CEO Mark Russell said on a call with analysts after Nikola released its latest earnings. “In light of all of these uncertainties, we believe it would be prudent to revise expectations for Nikola Tre BEV deliveries.”
The Phoenix-based company is one of a number of newer and legacy automakers developing clean-energy commercial vehicles and also betting on fuel cells as a viable option for long-distance transportation. While it is also working on battery-electric big rigs, Nikola’s main focus is hydrogen-powered fuel cell trucks, a nascent field with competition from Toyota Motor Corp., Hyundai Motor Co. and and its own supplier, General Motors.
Nikola said it aims to deliver 1,200 BEV trucks next year and 3,500 in 2023. It plans to start full production of the Tre with partner Iveco in Ulm, Germany, in the final quarter of this year and is building a plant in Arizona to manufacture fuel cell-vehicles.
Shares of the company sank in post-market trading after CFO Kim Brady said Nikola was on track to spend all capital allocated for a new factory and hydrogen fueling stations this year — and could seek to tap the market to raise more funds.
“Do not be surprised if we do end up tapping the market this year,” Brady said on the call. “We do that because we want to make sure that we have ample liquidity at least 12 months to 18 months in advance.”
Nikola’s shares fell 7 percent to $18.35 in morning trading Friday on Wall Street.
As of Dec. 31, Nikola had cash and restricted cash totaling $845.3 million and about 450 employees, according to a securities filing.
The company, whose market value once briefly topped Ford Motor Co.’s last year, reported a narrower-than-expected loss for its latest quarter.
Nikola kept investors guessing about a partner for its fuel network after missing a self-imposed year-end deadline. It plans to develop as many as 700 hydrogen stations in the U.S. and originally promised to find a co-development partner in 2020. While it did not set a new timeline, company executives said discussions with multiple potential partners have intensified in recent weeks.
Production of short- and long-range fuel-cell trucks is expected to start at the Arizona plant in the second half of 2023 and 2024, respectively. And Nikola announced plans earlier this week to debut a long-range version of its semi in 2024.
Russell said the startup remained on track to hit these milestones even as he noted the company has adopted a more focused strategy following a scaled-down deal with GM and cancellation of an electric-powered garbage truck program.
Inaccuracies
Meanwhile, the company’s internal review found the questionable assertions — seven of which were made by Milton and two by Nikola — were “inaccurate in whole or in part, when made,” according to the filing.
The misleading statements included a December 2016 claim by Milton that one of Nikola’s first prototypes, the Nikola One, was a fully functioning vehicle. Bloomberg News reported in June that Milton had greatly exaggerated the capabilities of the truck and that it could not be driven at the time it was shown publicly because of missing parts, according to people familiar with the matter.
The review also found some of Milton’s assertions in July of last year about the status of Nikola’s technology and its progress in developing prototypes could not be substantiated.
Not all of the allegations made against the company were validated by the review, and in its filing Nikola disputed the notion its entire business was a “intricate fraud” built on dozens of lies, as Hindenburg suggested in its report.
Russell told analysts on the conference call Thursday the company’s downsized agenda is a better fit. “We now believe Nikola is in the best position the company has ever been to execute on our core business plan.”