Nikola Corporation: Troubled electric truck company famous for fraudster boss files for bankruptcy

A scandalised EV company, once a white-hot startup spruiked as an alternative to Tesla trucks, has filed for bankruptcy in a Delaware court.

Nikola Corporation, which was a Wall Street darling before a string of scandals and its founder landing in jail, filed a Chapter 11 bankruptcy protection in the US, announcing it would pursue an auction and sale of its assets.

In announcing the move, CEO Steve Girsky expressed gratitude for the efforts of employees and the company’s progress with zero-emissions technology but acknowledged the “various market and macroeconomic factors that have impacted our ability to operate”.

He said the company has made efforts in recent months to raise funds and “reduce our liabilities, clean up our balance sheet” and save cash, but it was not enough to save the company.

“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,” Mr Girsky said in a statement.

The Arizona company filed for protection in the US bankruptcy court in Delaware. It enters the Chapter 11 with about $47 million in cash, which it says will fund the foregoing activities and sales. Nikola has filed a motion to be approved for an auction and sale of the business.

In the meantime, Nikola said it plans to continue limited service and support operations for its vehicles through the end of March, subject to court approval, but would need to raise more funds to support ongoing fuelling and other operating activities after then.

Nikola Corp produced battery-electric and hydrogen-powered commercial trucks, poised as alternatives to the Tesla Semi. Its energy brand, HYLA, focused on pushing forward hydrogen energy systems.

At the peak of its power in 2020, the company was valued at over $US30 billion, surpassing even Ford Motor Company. In June that year, company stock had soared to nearly $2000 a piece, according to FXLeaders.

However, those stock prices plummeted later that year when reports surfaced accusing its founder of fraud.

Trevor Milton founded Nikola Corporation — named after the electricity pioneer Nikola Tesla — in 2016 from a basement in Utah. Six years later he was on trial accused of misleading investors about what was promised to be revolutionary technology for road transportation and green trucking.

At the 2022 trial, prosecutors said one instance of this fraud was in sharing a company video of a prototype truck purportedly being down a desert highway. Prosecutors said the video was actually of a non-functioning Nikola rolling down a hill.

They also said Milton falsely claimed to have produced a revolutionary truck that was, actually, a General Motors truck with Nikola’s logo branded onto it.

At the trial, CEO Mr Girsky, who was called a as government witness, said the founder “was prone to exaggeration” when pitching his business to investors, Associated Press reports.

Milton has resigned from his company in 2020 after the fraud reports surfaced and sent stocks into a tailspin. In 2023, he was sentenced to four years in prison for exaggerating claims about his company’s production of zero-emission 18-wheel trucks.

Aside from its internal troubles, the company has struggled to recover and find its footing in an increasingly-fraught EV market, with more makers and slower sales, particularly for EV trucks.