It’s been a difficult few weeks for Nikola. The Financial Times 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…
According to a spokesperson, 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.”
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 The Telegraph, 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.”
As The Guardian 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” and further warnings that “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.
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