Emissions-Free Truck Maker Nikola Files for Bankruptcy

Market challenges and weak demand have pushed electric heavy truck manufacturer Nikola Corp. into bankruptcy. According to company leadership, Chapter 11 protection is the most appropriate move right now.

The $47 million in cash Nikola has right now will hopefully allow the company to stay afloat while it reorganizes. It is asking the court for permission to sell assets just to pay the legal costs involved with the bankruptcy filing.

“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” said CEO Steve Girsky, per FOX Business.

In earlier attempts to save itself from bankruptcy, Nikola tried to raise additional money, improve its balance sheet, lower liabilities, and hold back cash to maintain operations. Yet, the efforts weren’t enough to pull the EV maker out of the hole.

Alongside liabilities between $1 billion and $10 billion, Nikola estimates $500 million to $1 billion in assets. Some service and support operations, such as battery-electric and hydrogen-powered trucks already in the field, will remain active through the end of next month.

Nikola’s Hard Road to Disaster

Nikola went public in 2020 and has seen turmoil within its ranks ever since. Girsky took the CEO role in August 2023, making him the fourth CEO since the company’s founding more than 10 years ago.

The company’s founder, Trevor Milton, left after being accused of misrepresenting the progress of product research and development, leading investors to think the company was further ahead in technology. Allegedly, the former Nikola executive also misled the public through statements made on social media and in interviews. The accusations led to a securities and wire fraud conviction, which sent Milton to prison in 2023.

Under Girsky’s direction, Nikola continued its downward spiral. During a third-quarter earnings call last year, the CEO predicted money reserves were likely to run out before the first quarter of 2025 and he was looking for ways to “optimize cash.”  

At the EV maker’s Phoenix, Arizona, headquarters, a company truck caught fire in June 2023. An investigation found a coolant leak inside a battery pack was the cause. Subsequently, Nikola recalled hundreds of trucks and stopped sales until the problem was resolved.

In June 2024, another EV startup, Fisker, filed for bankruptcy in an effort to keep the company going. Sarah Foss, head of legal at Debtwire, told FOX Business that Nikola is going down the same road as Fisker, which also scrambled to sell assets to raise some cash.