Nikola Corp. filed for Chapter 11 bankruptcy protection Wednesday after failing to secure a buyer or raise additional capital. The Phoenix-based manufacturer of zero-emissions trucks announced it will pursue an auction and sale process for its assets as it grapples with ongoing financial difficulties.
This marks a dramatic fall for a company that was, at its valuation peak in 2020, briefly worth more than Ford Motor Co.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” said Steve Girsky, president and CEO of Nikola, in a statement. “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.”
The bankruptcy filing comes after months of attempts to raise capital and reduce liabilities. Nikola enters Chapter 11 with approximately $47 million in cash on hand, which it plans to use to fund limited operations, implement the sale process and exit bankruptcy through a plan process.
Nikola’s rapid rise and fall
Founded in 2014 by Trevor Milton, Nikola went public in June 2020 through a merger with a special purpose acquisition company. At its peak, the company was valued at $30 billion and signed a multibillion-dollar deal with General Motors. However, Nikola’s fortunes quickly reversed following fraud allegations against Milton by short-seller Hindenburg Research in September 2020.
Milton resigned shortly after and was later convicted of securities fraud and wire fraud in 2022 for misleading investors about Nikola’s technology and operations. The scandal led to the collapse of the GM deal and began a steady decline in Nikola’s stock price and market value.
Despite these setbacks, Nikola managed to bring its electric and hydrogen fuel cell trucks to market. “Our customers have accumulated approximately 3.3 million fleet miles across both our FCEV and BEV truck platforms and our HYLA fueling network has dispensed well over 330 metric tons of hydrogen,” Girsky noted in the bankruptcy announcement.
However, production volumes remained low, with only 600 vehicles manufactured since 2022. Costly recalls further strained the company’s finances.
Asset sale process
Nikola has filed a motion seeking authorization to pursue an auction and sale process under Section 363 of the U.S. Bankruptcy Code. The proposed bidding procedures, if approved by the United States Bankruptcy Court for the District of Delaware, would allow parties to submit binding offers to acquire Nikola’s assets free of the company’s debts and certain liabilities.
“Nikola intends to market and sell all, substantially all, or a portion of its assets and effectuate an orderly wind down of its businesses,” the company stated. Potential buyers could include both strategic and financial investors.
During the sale process, Nikola plans to continue limited operations, including certain directly provided service and support for trucks currently in use, as well as some HYLA hydrogen fueling operations through the end of March. After that point, the company says it will need partners to support these activities.
The bankruptcy raises questions about the future of Nikola’s electric and hydrogen fuel cell truck technology. While the company made progress in bringing vehicles to market, it’s unclear whether a buyer will emerge to continue development and production.
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