The GM-Nikola deal has been strange from the beginning. Why would GM, who will reveal their own electric pickup in just over a month, want to produce a competing pickup from a startup company? More troubling were the claims that came after. A glaring report from Hindenburg Research suggested Nikola misled investors and GM about the viability of the brand and their technology. Nikola was the first to respond to (and unsurprisingly deny) the accusations. Now, according to CNBC, GM CEO Mary Barra has defended the deal as well.
“The company has worked with a lot of different partners and we’re a very capable team that has done the appropriate diligence,” said Barra in a statement to RBC Capital Markets. Barra nor anyone else from the Detroit automaker has commented more directly than this on the allegations. Barra did, however, provide some additional reasoning for the GM-Nikola deal.
“We will still compete fiercely as it relates to go-to-market with our strong brands like we do today. This is just a more efficient way to do it. It gets us scale faster, so it’s good for the customer but also is good for the General Motors shareholder cause our technology is being used more broadly,” said Barra.
The deal will see GM gain an 11 percent share of Nikola, and full production control over their Badger EV truck. GM will also supply their upcoming Ultium batteries for the truck. Both companies have their own benefits to the deal, with Nikola getting additional monetary capital and GM getting additional EV credits to offset fines for existing and future internal combustion powered models.
Nikola responded to the claims of the Hindenburg Research report earlier this week with the following statement:
“Nikola has been vetted by some of the world’s most credible companies and investors. We are on a path to success and will not waver based on a report filled with misleading information attempting to manipulate our stock.”
Since then, the Security and Exchange Commission has opened up an investigation on Nikola, and it would look into these fraudulent allegations.
Given what a large and powerful player GM is in the automotive industry, it would be shocking if they didn’t thoroughly investigate Nikola before perusing this partnership. And at the end of the day, Nikola appears to have more to lose than The General.