Nikola’s EV truck dream goes bust
Summary
Another green industrial-policy project enters Chapter 11.
Another green-energy unicorn died Wednesday as Nikola Corp., the electric-truck startup, filed for Chapter 11 bankruptcy. Its spectacular market crash is another warning about the perils of industrial policy and chasing government subsidies.
The 11-year-old EV maker aspired to be the Tesla of trucks. Nikola went public in June 2020 through a blank-check merger amid the euphoric pandemic stock-market recovery and Democratic promises of a Green New Deal. It fetched a $27 billion market valuation that at the time was greater than Ford’s even though Nikola had sold no vehicles.
Supposedly sophisticated investors were taken in by its marketing hype. General Motors announced on Sept. 8, 2020 that it was taking an 11% stake in Nikola, which CEO Mary Barra hailed as an “industry leading disrupter." It was disruptive in a different way.
In January 2018 Nikola posted a video on Twitter of its model truck appearing to power effortlessly down a flat road with the caption: “The Nikola Hydrogen Electric trucks will take on any semi-truck and outperform them in every category; weight, acceleration, stopping, safety and features—all with 500-1,000 mile range!" That would be a revolutionary—if true.
It wasn’t. According to a 2021 federal fraud indictment of founder Trevor Milton, an inoperable prototype was towed to the top of a hill. Then Nikola employees released the brakes so it looked like it was cruising along. All the while the door was taped shut to keep it from falling off, and its batteries were removed to prevent the truck from catching fire.
After taking investors for a ride, Mr. Milton was convicted in 2022. Nikola’s marketing deceptions and problems spooked investors. Nikola in 2023 recalled 209 battery-electric trucks owing to fires. As of last October, it had sold fewer than 500 trucks—and at a heavy loss. Nikola reportedly had sold hydrogen trucks for $351,000—about half what it cost to produce them, though its sales price was still about twice as much as an internal-combustion-engine semi. This was financially unsustainable, especially amid higher interest rates.
California regulators and the Biden Administration tried to boost the electric-truck market with mandates and subsidies. The Inflation Reduction Act includes a $40,000 tax credit for buyers of electric trucks. An Environmental Protection Agency rule last spring requires that electric models make up 25% of long-haul tractor sales by 2032.
But the government still couldn’t induce truckers to buy them. “Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate," Nikola CEO Stephen Girsky said on Wednesday. Translation: High costs and technological limitations make EVs impractical for long-distance trucking operations.
Another electric-truck maker, Lordstown Motors, filed for bankruptcy in 2023. Fisker Inc. failed last June. The British electric-bus startup Arrival sold its assets to another EV startup, Canoo Inc., which filed for bankruptcy last month. The Biden Energy Department provided a $6 billion rescue for Rivian Automotive after it lost $107,043 on each vehicle it sold during the first nine months of last year.
Critics say industrial policy is picking winners and losers, but where are the winners?
