General Motors terminated a transaction to take a stake in Nikola, but reached a preliminary agreement to supply its technology to the electric-truck startup, the companies said Monday.

Shares of Nikola plunged following the announcement, losing around one-fourth of their value.

Under a revised agreement, GM reached a non-binding memorandum of understanding to supply GM's fuel cell technology to Nikola trucks. The pared-down deal also mentions a "potential supply agreement" whereby GM's Ultium batteries could be used in Nikola trucks, Nikola said in a securities filing.

A GM spokesman confirmed to AFP that the new agreement does not include an equity stake.

The relationship between the two companies is much smaller than the one unveiled on September 8, when GM embraced Nikola as a partner in its push towards electric vehicle and planned to take an 11 percent stake in the company.

Nikola, then led by founder Trevor Milton, has touted its Badger pickup truck.

A photo of the Nikola Two truck, one of the products by electric-truck startup Nikola, which announced a significantly scaled-back preliminary agreement with General Motors
A photo of the Nikola Two truck, one of the products by electric-truck startup Nikola, which announced a significantly scaled-back preliminary agreement with General Motors Nikola Motor / -

But Nikola said in the filing it was abandoning the Badger and would refund customer deposits for the vehicle.

"We are excited to take this important step with GM, which provides an opportunity to leverage the resources, strengths and talent of both companies," said Nikola Chief Executive Mark Russell.

"This supply agreement recognizes our leading fuel cell technology expertise and development," said GM executive vice president Doug Parks.

"Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future."

Nikola shares surged immediately after the September deal's announcement, but began faltering thereafter following a report from Hindenburg Research that called the company an "intricate fraud" and raised myriad questions about Milton, who resigned on September 21.

On Monday, Nikola shares dove 26.4 percent to $20.56 in mid-morning trading, while GM shed 2.9 percent to $43.79. Major indices were down about one percent.

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