Inside the Electric Car Bubble

With Nikola’s future in question and Tesla’s value in doubt, is the EV bubble racing towards an unavoidable crash?

Its been a difficult few weeks for Nikola. The Financial Times reports that the US companys stock fell almost 30 per cent last Monday with the news that its founder Trevor Milton is stepping down amidst fraud allegations. 

Miltons resignation comes after a report from short seller Hindenburg Research claimed that Nikolas 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 arent compulsory in electric trucks?

With Miltons 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 Griskys 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 Miltons $186 million loss remains to be seen.

The timing doesnt help, either; the revelations come less than six months after Nikola went public in June through a special-purpose acquisition.

Nikolas change of leadership isnt the only question mark over the world of electric cars this week. Writing for The Telegraph, Olivia Rudgard, Laurence Dodds and James Cook questioned Teslas 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 problemsand further warnings that Tesla’s electric car plans are simply fantasyand it seems that for better or worse the electric car bubble may be about to burst.

To unlock this article, please subscribe. Benefits include:

  • 2 Magazines delivered to your door
  • Direct offers and benefits with luxury hotels, clubs, restaurants and handpicked brands
  • Invitations to a minimum of 4 member-only events each year
  • Paywalled content — access to exclusive online features only for members
  • 15% off selected brands online with Gentleman's Journal
  • Your own Clubhouse membership card to redeem all the perks
Clubhouse Membership

Clubhouse Membership

Buy Now

Further Reading