Electric-truck startup Nikola says talks with GM ongoing

[SAN FRANCISCO] Nikola Corp said talks with prospective partner General Motors Co are ongoing as the electric-truck startup struggles to assure investors that its business model remains viable amid federal regulatory probes.

The two companies are discussing a strategic partnership announced in September, which would give GM an 11 per cent stake in Nikola in exchange for providing its battery and hydrogen-fuel cell technology and manufacturing Nikola's debut pickup truck.

Nikola executives reiterated Monday that they have a "base plan" to proceed with battery-electric and fuel-cell trucks even if the GM deal is not closed, noting existing technology-sharing deals with other partners such as Robert Bosch GmbH. The company also will move ahead on hydrogen-fuelling stations even without a partner for that project, they said.

A short seller's allegations of deception against Nikola - which the company has denied - have clouded the outlook for a deal with GM, but they remain in negotiations ahead of a Dec 3 deadline.

"There has been a lot of speculation about our ongoing discussions with GM. Discussions do continue," Mark Russell, the company's chief executive officer, told analysts Monday on a conference call. "We're interested in doing the deal with GM, if we can get it done." GM CEO Mary Barra said last week the proposed deal with Nikola "has not closed" but declined to provide further details.

Federal Subpoenas Nikola is cooperating with Department of Justice and Securities and Exchange Commission investigations prompted by the short-seller report, Mr Russell said. His comments came the same day the company disclosed in a regulatory filing that it and founder Trevor Milton, who resigned as chairman in September, were subpoenaed as part of the DOJ probe.

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The former chairman and Nikola received the grand jury subpoenas from the US Attorney's Office for the Southern District of New York on Sept. 19, the company said. In addition, the SEC has issued subpoenas to Nikola, its directors and eight unspecified officers and employees, it said.

Representatives for Mr Milton, who has previously denied deceiving investors, declined to comment. The Justice Department didn't immediately respond to a request for comment.

Shares of Nikola tumbled following the Sept 10 report detailing the allegations of fraud and are down 56 per cent since then.

The Phoenix-based manufacturer's stock rose 2.2 per cent in postmarket trading on Monday after closing down 4.9 per cent to US$18.63.

Binding Contracts As recently as last month, Russell had reaffirmed the goal of finding a hydrogen-fuelling infrastructure partner by the end of 2020, but on the call with analysts he indicated that timeline could slip into early next year. The company has said it will open its first commercial station in the second quarter of 2021.

Nikola has held talks with major oil company BP Plc about setting up the planned network of as many as 700 stations across North America, Bloomberg reported in September. Nikola and BP have declined to comment.

Nikola is working on a battery-powered semi truck called the Tre to be built starting in late 2021 in Ulm, Germany, in a joint venture with CNH Industrial NV's Iveco unit. It ultimately plans to manufacture both the battery-electric Tre and - by late 2023 - a fuel-cell-powered version of that big rig at its own plant in Coolidge, Arizona, which is under construction.

Mr Russell said he expects to get binding contracts for orders one year in advance of production for the alternate-fuel trucks it plans to bring to market.

Third Quarter Beat The company went public through a reverse merger with a blank-check company in June. At one point, its shares ballooned to almost US$80 a share, giving it a market capitalization greater than Ford Motor Co. despite not generating any meaningful revenue. Nikola reported an adjusted 16-cents per share loss in the latest three-month period, better than a consensus forecast by analysts for a 20-cents a share loss. That compares with a 16-cents per share second quarter loss and a 5-cent loss a year ago.

The third-quarter losses before interest, taxes depreciation and amortisation came to US$58.8 million, better than a consensus forecast for an Ebitda loss of US$70.8 million. Nikola lost US$47 million in the previous quarter and US$11.1 million in the third quarter of 2019.

President-Elect Joe Biden's victory in the US election bodes well for EV makers such as Nikola, Mr Russell said.

"We expect the Biden Adminstration to be more aggressive on these measures," he told analysts. If Mr Biden's party wins a majority in the US Senate, it could result in legislation for an even more ambitious clean-energy policy styled on "Green New Deal" proposals, he added, "which of course makes the whole country look a lot more like California."

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