What Made General Motors Say No To Nikola’s Badger Truck Deal

A deal to produce Nikola’s electric-hydrogen-powered Badger pickup truck by General Motors (GM) fell apart Monday after GM instead announced a much smaller deal to provide its Hydrotec fuel-cell system for Nikola’s global Class 7 and 8 semi-trucks.

While underwhelming, GM executive Doug Park called the new deal “an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future.”

But what changed since GM announced a "strategic partnership" with Nikola (NKLA) to produce the Badger pickup truck?

Since that September announcement, Nikola has been the subject of controversy. The Phoenix-based auto company, which went public on June 4, was prepared to offer $2 billion in stock, or an 11% stake in the company, in exchange for GM’s services and access to its parts and components but just a few short days after the news of the partnership, Nikola was involved in a report from short seller Hindenburg Research that called it an “intricate fraud.”

Nikola founder Trevor Milton was accused of defrauding investors, with claims that he lied to push the company’s technology to the forefront of the EV market. Nikola called the allegations "false and defamatory."

Milton would resign as chief executive on Sept. 21 amid an SEC investigation and just weeks after he posted on Twitter that "cowards run, leaders stay and fight." A week later, Milton faced two separate sexual assault accusations of girls who were 15 years old, which included one from his cousin.

The deal between GM and Nikola would be put on hold with a Dec. 3 deadline to reach a revised deal.

In the meantime, CEO Mark Russell told Bloomberg that Nikola had a backup plan if a venture with GM did not emerge.

“We have the ability and we have a base plan of doing it ourselves. If we have a partner, that just enables us to consider going faster and helps reduce the risk. We’ve proven that over the years that we are a partnership company when those things are available to us," Russell said.

But Russell said the backup plan was to remove the pickup truck from the automaker’s lineup, as “the Badger is part of our discussions with GM. And we’ve been clear all along that we wouldn’t build a Badger without an OEM partner.”

Now under the fuel cell deal, Nikola will pay upfront for the “capital investment for the capacity” and the two companies will discuss a potential supply agreement for GM’s Ultium battery system also for integration in Nikola’s Class 7/8 trucks.

GM will produce the Hydrotec fuel cell system at its Brownstown Charter Township battery assembly plant in Michigan.

It was unclear if Nikola will move forward with the Badger pickup truck or drop it from its vehicle lineup or find another OEM to produce the truck with.

Shares of GM on Monday were trading at $44.26 as of 12:44 p.m. ET, down 81 cents, or 1.79%, while shares of Nikola were trading at $21.63, down $6.30, or 22.56%.