Nikola, a once-promising electric vehicle start-up, filed for bankruptcy protection on Wednesday. The company had aimed to develop long-haul semi trucks powered by hydrogen and electricity. Nikola went public in 2020 before selling a single vehicle.
Its stock price initially soared as investors bet on it becoming the next Tesla. However, doubts soon emerged about the claims made by Nikola’s founder, Trevor Milton, regarding the company’s technology and customer orders. In recent quarters, Nikola had started delivering a small number of electric trucks.
But it was not enough to generate profits. The company reported having $200 million in cash and $270 million in long-term debt late last year.
Nikola’s financial struggles and plans
Its stock plummeted earlier this month on reports of an imminent bankruptcy filing. Nikola revealed it has about $47 million in cash on hand. It plans to continue “limited” service and support for trucks currently in operation.
The bankruptcy filing listed liabilities of $1 billion to $10 billion. Nikola estimates it owes between 1,000 to 5,000 creditors. Its largest creditor is the Securities and Exchange Commission, owed $80.2 million from a 2021 settlement.
Nikola intends to use the bankruptcy process to sell most or all of its assets and wind down its operations. The downfall of Nikola highlights the challenges faced by several young electric vehicle companies. Many have struggled to turn ambitious ideas into commercially viable products.
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