It’s been a difficult few weeks for Nikola. 

 reports that the US company’s stock fell almost 30 per cent last Monday with the news that its founder Trevor Milton is stepping down amidst fraud allegations.

Milton’s resignation comes after a report from short seller Hindenburg Research claimed that Nikola’s proprietary technology was actually purchased from another company, something Hindenburg Research has classified as “intricate fraud.”

More damningly, a 2018 video of the 1,000 HP, zero-emission Nikola One semi-truck driving through a desert was proven to be fake, with Nikola admitting last week that the truck was only moving because it had been left to roll downhill…

, Nikola “ultimately decided not to invest additional resources into completing the process to make the Nikola One drive on its own propulsion.”

Or maybe Maybe handbrakes aren’t compulsory in electric trucks?

With Milton’s departure following the controversies, Stephen Girsky, a Nikola board member and former vice-chairman of General Motors will step in as chairman. In a public statement, Girsky expressed his desire to thank Milton for his “visionary leadership and significant contributions to Nikola since its founding.”

CEO and founder of Nikola, Trevor Milton, who has now been ousted under a cloud of alleged fraud and deception


Despite Grisky’s kind words, the exit has been an expensive one for Milton who will forgo $166 million in stock awards and a $20 million consulting fee. He will, however, retain around 25 per cent of Nikola stock. Whether or not the stock options will provide adequate compensation for Milton’s $186 million loss remains to be seen.

The timing doesn’t help, either; the revelations come less than six months after Nikola went public in June through a special-purpose acquisition.

Nikola’s change of leadership isn’t the only question mark over the world of electric cars this week. Writing for 

, Olivia Rudgard, Laurence Dodds and James Cook questioned Tesla’s recent evaluation, and asked why investors are becoming more skeptical about the “electric car hype machine.”

 pointed out “Tesla has never made an annual profit but the company has a market value equivalent to a third of the combined US, EU and Japanese auto indices – despite an expected share of only 0.8% of the global auto market [in 2020].”

A $300 billion valuation for a company which is yet to turn a profit certainly fits the definition of “hype”. Add to that reports of a driver been found asleep at the wheel of a Tesla car travelling at 93mph, a piece this week arguing “

Electric cars won’t solve our pollution problems

Tesla’s electric car plans are simply fantasy

” and it seems that – for better or worse – the electric car bubble may be about to burst.

A $300 billion valuation for a company which is yet to turn a profit certainly fits the definition of “hype”.

Add to that reports of a driver been found asleep at the wheel of a Tesla car travelling at 93mph, a piece this week arguing “

A prototype truck from the GM-backed Lordstown Motors


“Throw a briefcase full of cash in Silicon Valley today and you will hit an EV company, many racing towards an early public float,” write the authors of the aforementioned 

 piece. “There is Rivian, Nio, Fisker, Workhorse, Lordstown Motors, XPeng, and of course Tesla, whose breathtaking stock rally this year has dragged many imitators behind it.”

The argument is that as a sector, electric vehicles (EV) are growing too rapidly, and over-promising without having the cash to properly develop their ideas.

There is certainly no end of competitors waiting to beat Tesla and Nikola to the finish line, but not all seemed destined for financial failure.

Founded in 2009, Detroit-based Rivian specialises in electric pick-ups and counts eco-aware climber Alex Honnold among its ambassadors. Meanwhile, the Chinese brand Nio has seen sales 

 so far in 2020, suggesting that the appetite for electric vehicles is certainly growing in the huge Chinese market.

XPeng, a Chinese competitor, also made headlines recently after raising $1.5 billion in its US 

Of course, not every company has been as successful. Fisker Automotive released a luxury electric car in 2011 but was declared bankrupt in 2013.

Meanwhile, the GM-backed US start-up Lordstown Motors announced its IPO this August and is hoping to secure $675 million in funding, $225 million more than its CEO 

 the company needed – perhaps further evidence that developing electric cars is pretty damn expensive.

The Xpeng P7 intelligent coupe — a China-based challenger in the EV race


, Dan Ives, an analyst at Wedbush Securities explains that electric cars remain a good investment as the industry is still on a trajectory to see massive growth.

“You’re talking about a very investable trend, rather than a trend that’s just built on hype,” Ives argues.

Should the bubble burst, future EV investors might be encouraged to invest more diligently. Those companies advertising just how well their new electric trucks can drive down desert hillsides should probably be met with some skepticism.

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