Carmaker General Motors (NYSE: GM) has canceled a previously announced deal with startup Nikola. GM has abandoned the construction of the company's planned pickup truck Nikola (NASDAQ: NKLA) Badger.
Under the terms of the deal announced on September 8, Nikola was supposed to transfer to GM a block of its shares in the amount of $2 billion and the right to appoint one member of its board of directors, and in return, the startup could gain access to certain GM components (including batteries and fuel cells) and gain access to GM's manufacturing facilities to design and manufacture its Badger pickup truck. This should have saved $4 billion in battery and electric motor costs and $1 billion in component design and certification costs for Nikola. GM was to receive an additional $2 billion in benefits from contracts for the production of Badger and the supply of batteries and fuel cells, as well as benefit from a reported 80% reduction of the company's overall greenhouse gas emissions from sales of Badger.
However, after a high-profile scandal involving the founder of Nikola Trevor Milton, who recently stepped down as Chief Executive, GM has significantly reduced the deal. Nikola today announced the signing of a non-binding Memorandum of Understanding (MOU) with GM for a global supply agreement related to GM's integration of Hydrotec fuel cell systems for Nikola commercial semi-trucks. This memorandum canceled and replaced the deal announced on September 8, 2020. That is, the Detroit-based automaker will not design and build Badger electric trucks.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.