Nikola Corp. shares traded 50% higher after the company reported that General Motors will invest $2 billion and take an 11% ownership interest in the firm to engineer and manufacture the Nikola Badger electric line of vehicles expected to be released in 2022.
Source: Streetwise Reports 09/08/2020
Battery-electric and hydrogen-electric vehicles maker Nikola Corp. (NKLA:NASDAQ) and General Motors Co. (GM:NYSE), today announced “a strategic partnership that begins with the Nikola Badger and carries cost reductions through Nikola’s programs, including: Nikola Badger, Nikola Tre, Nikola One, Nikola Two and NZT.”
The company noted that under the terms of the strategic agreement it will employ General Motors’ Ultium battery system and Hydrotec fuel cell technology, which will aid in driving General Motors (GM) toward achieving a significant commercialization milestone.
The company reported that it will issue GM $2 billion in common stock in exchange for in-kind services and access to GM’s global safety-tested and validated parts and components. Under the terms of the agreement, GM will be responsible to engineer, homologate, validate and manufacture the Nikola Badger battery electric and fuel cell versions.
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Nikola Corp.’s founder and Executive Chairman Trevor Milton commented, “Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn’t dream of a better partnership than this…By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed. We made three promises to our stakeholders and have now fulfilled two out of three promises ahead of schedule.”
Mary Barra, chair and CEO of General Motors, remarked, “This strategic partnership with Nikola, an industry leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems…We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability. In addition, 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.”
The company indicated that “the agreement with Nikola extends GM’s utilization of its fuel cell technology to the Class 7/8 semi-truck market and represents a high-volume commercialization of its leading Hydrotec fuel cell system and complements the company’s battery-electric propulsion.” The firm explained that GM’s Ultium battery is designed and engineered with silicon anodes and lithium metal anodes, which offers better economics and greater vehicle range and additionally reduces dependence on expensive and rare metals.
The partnership agreement states that Nikola will be in charge of sales and marketing for the Badger and will retain the Nikola Badger brand. The company advised that production of the Badger is expected to commence in late 2022.
Nikola indicated that GM will receive the right to nominate one member to its Board of Directors. The firm stated that it will continue to operate as a an independent company and that the investment transaction, which is expected to close prior to September 30, 2020, remains subject to antitrust regulatory approval and other customary closing conditions.
Nikola Corp. is headquartered in Phoenix, Ariz., and describes itself as “a designer and manufacturer of zero-emission battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen station infrastructure that is driven to revolutionize the economic and environmental impact of commerce as we know it today.”
General Motors is a global auto manufacturer based in Detroit, Mich. The company sells its vehicles under the Baojun, Buick, Cadillac, Chevrolet, GMC, Holden and Wuling brands. The firm also owns vehicle safety and security services company OnStar.
Nikola Corp. began the day with a market capitalization of around $13.5 billion with approximately 379 million shares outstanding and a short interest of about 3.2%. NKLA shares opened more than 29% higher today at $46.00 (+$10.45, +29.40%) over Friday’s $35.55 closing price. The stock has traded today between $42.44 to $54.56 per share and is currently trading at $53.21 (+$17.66, +49.68%).
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