With the former vice president of General Motors Co. replacing Nikola Corp. au’s founder amid accusations of fraud, the commissioning of electric and hydrogen trucks could now be better supplied to fulfill its purpose and a $2 billion partnership with GM, according to analysts.
GM shares fell by 4. 8% on Monday, while the Phoenix-based startup plummeted 19. 3% after Nikola’s executive leader Trevor Milton resigned, who was accused through a small trader of misleading investors about Nikola’s vehicle functions and technology. GM from 2009 to 2014, without delay assumed the presidency.
“The concentrate will have to be in society and his project that fits the world, not me,” Milton wrote in a Twitter post. “I intend to protect myself against false accusations made to me through outdoor critics. “
Milton’s departure, GM said in a statement, will not save him the ongoing paintings to conclude Nikola’s agreement with GM to shape a 10-year alliance under which GM licenses Nikola for his mobile generation of hydrogen batteries and fuel and will design and build his Badger. Truck. Girsky, a member of Nikola’s board of directors, made the first presentations between the two companies, GM CEO Mary Barra said when the deal was announced two weeks ago.
Girsky, 58, joined Nikola’s board in June when the publicly traded and partly proprietary blank check company VectoIQ Acquisition Corp. partnered with Nikola. In 2009 and overseeing a restructuring of its German unit. He was on the shortlist to upgrade Dan Akerson as CEO in 2013 when Barra was selected, leaving Detroit’s automaker soon after and leaving the board in 2016. Girsky did not respond to the request to comment, however, in the past he had addressed his commitment to Nikola.
“We appeared with an army of others to do due diligence on this,” Girsky said in an August 2 webcast of “Autoline This Week” about VectoIQ’s investment in Nikola. “I have no doubt that there will be twists and turns here, however, I have put my reputation at stake by this agreement. “
The accusations against Nikola in a Hindenburg Research report published on September 10 do not involve GM call into question the fact that the Detroit automaker did its homework. Barra, at an investor convention last week, said GM had done “the right diligence” and that the deal validates the company’s technology.
Nikola’s valuation, which a week after his IPO had soared to $30 billion, more than that of Ford Motor Co. before even building a vehicle, it is “a complex fraud founded on dozens of lies,” Hindenburg wrote in the report two days after GM- Nikola’s association was announced. He referred to a video that gave the impression of a vehicle running down a hill. Although Nikola stated that the prototype semi-trailer was not self-propelled, the company called the report “defamatory,” hired a corporation of lawyers to explore legal solutions, and welcomed the involvement of U. S. securities regulators in the case. The U. S. Department of Justice would also investigate the situation.
“There is now a belief that Nikola is deceptive investors and business partners, and this belief has overshadowed the price Nikola places on the partnership with GM, at least in the short term,” said Karl Brauer, executive analyst for automotive studies iSeeCars. com. “The long-term benefits of the alignment between GM and Nikola would possibly still materialize, but until they do, it’s a black eye for both companies. “
On monday, GM pushes the importance of Nikola’s role in his electrification effort: “Nikola, Honda and other corporations that are turning to GM generation as a platform for their products are just one component of our overall electric vehicle strategy. “Our general purpose is to get everyone into an electric vehicle and drive adoption. “
The partnership with Nikola represents little additional investment for GM, which is already emerging the vehicle platforms Nikola will use, said David Cole, president emeritus of the Automotive Research Center in Ann Arbor.
“It’s Cole. La a no-brainer for GM,” Nikola said, “that they want to make a business case so they can make those trucks and sell them competitively with others in the company and compete with internal combustion vehicles. “
Girsky, who was one of Morgan Stanley’s most sensitive automotive analysts before joining GM, gives Nikola the credibility to do so, Cole said.
Possibly also offering a more mesured approach, analysts noted. Milton, 39, is known for his frustrations on Twitter and his responses to the parties to the conflict on social media; Mark Rusell replaced him in June as CEO when the company went public to exert a reassuring influence.
“Mr. Milton’s exit from the equation will be positive,” Jeffrey Osborne, an analyst at Cowen Inc. , told investors on a note. “Hopefully, this will minimize the drama in the coming weeks and months as the company advances fully electric Class 8 Trucks and mobile fuel infrastructure and the like, as well as paints to close the deal with General Motors. “
bnoble@detroitnews. com
Twitter: @BreanaCNoble