Under the 10-year deal, Nikola will use GM’s new Ultium lithium-ion battery system and its Hydrotec fuel cells, their first commercial application. GM will also “engineer, homologate, validate and manufacture” the Nikola-designed Badger pickup, which is powered by batteries and fuel cells, the companies said. In exchange, GM is getting $2 billion of newly issued Nikola stock and will be able to appoint one member of the Phoenix-based company’s board.
“This is the biggest announcement we have,” Nikola founder and CEO Trevor Milton (No. 249 on the Forbes 400 for 2020 list) said in a conference call. “This will allow Nikola to achieve things Nikola could never do on its own. … I could not be more excited about this announcement today.”
The announcement is a significant boost for Nikola, which faces considerable financial and technological challenges to get its zero-emission heavy-duty vehicles into production. For GM, the company gets more scale for its batteries and an opportunity to commercialize fuel cell technology it’s been developing for decades. Unlike Elon Musk’s Tesla
Nikola estimates the value of the partnership with GM to be worth $4 billion. The Badger is to be in production by 2022 and will be sold and marketed by Nikola, the companies said, without identifying which GM plant will build it. As an added benefit for GM, the automaker will receive zero-emission vehicle credits from sales of the Nikola pickups over the life of the contract.
Milton said on the call that Nikola will need “tens of thousands” of units of production per year for Badger, without elaborating.
“We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability,” GM Chairman and CEO Mary Barra said, who called Nikola “an industry leading disrupter.”
“Applying General Motors’ electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future,” she said.
Nikola board member Steve Girsky, who engineered the company’s recent public listing, is a former General Motors vice chairman and board member who helped restructure the company after its bankruptcy. A long-time financial analyst, he played a role bringing GM and Nikola together by making the initial introductions, Barra said in a conference call.
The announcement comes after Nikola’s Milton took to Twitter Sept. 4 offering a free Badger to the person who guess which company it would build the truck with and where a filming session involving the vehicle would take place. “First person to guess the #nikolabadger OEM AND where it’ll be filmed gets keys to a brand new BEV Badger.”
Nikola’s decision to use GM’s battery system comes as something of a surprise as Milton had said last year that the company was developing its own new chemistry that he said would be a breakthrough. On a call today, he said it’s a near-term cost decision to use the Ultium system, though “our next steps will be where I get together with with GM, and the other battery suppliers, and and talk about if (Nikola’s) technology could be utilized or implemented to help them drive down their costs as well.”
Reserving a Badger requires deposits that range from $250 to $5,000 depending on which of three packages is selected and will be applied directly to the final purchase cost. Truck base prices range from $60,000 for a battery-only version that travels up to 300 miles on a full charge to more than $80,000 for a truck that uses both batteries and a hydrogen fuel cell system with a range of up to 600 miles. Deposits include admission to the company’s “Nikola World” event in Phoenix in December and are fully refundable through Nov. 1 (after which all but $250, the cost of attending the event, is refundable).
Nikola, which doesn’t yet generate meaningful revenue, says its core business is semi-trucks powered by hydrogen fuel cells and batteries and the network of fueling stations to power them. It’s got at least 14,000 orders for the emission-free trucks, led by beermaker Anheuser-Busch, with plans to begin delivering vehicles in 2023. Prior to that, it will sell battery-powered trucks produced with partner Iveco in Europe, and is building a plant in Arizona to produce its Nikola One, Two and Tree models.
Shares of Nikola rose by $12.50 to close at $50.05 in Nasdaq