Nikola founder steps down as executive chairman
New York (CNN Business)Electric truck company Nikola is throwing its founder and former executive chairman Trevor Milton under the proverbial hydrogen-powered bus.
In a filing late Thursday with the Securities and Exchange Commission, Nikola acknowledged seven “inaccurate” statements that Milton, who left the company in September, allegedly made between July 2016 and July 2020 about the company’s progress developing electric and hydrogen-powered trucks. It also listed two other statements attributed to the company during that time when Milton was executive chairman.
The statements listed in the filing had all been mentioned among allegations made in a September short seller report by Hindenburg Research. Nikola acknowledged, in the filing, that the statements listed “were inaccurate in whole or in part, when made.”
Milton and other Nikola executives have already received federal grand jury and SEC subpoenas. Nikola also faces multiple civil suits from shareholders.
Nikola and Milton in the past had denied Hindenburg’s allegations. And in Thursday’s filing the company said that some of the allegations made by Hindbenburg had been found not to be accurate by an independent investigation commissioned by the company.
Milton remains the major shareholder in the company, with more than 20% of its stocks, despite his departure and the federal investigation into his alleged false statements.
Attorneys representing Milton in some of the legal actions surrounding the company did not respond to a request for comment about the filing.
The statements listed as inaccurate include a 2016 claim that Nikola had already engineered a zero-emissions truck and a 2020 statement that it had five trucks ready to come off the assembly line. Milton also said in late 2019 and again in mid-2020 that Nikola “can produce” over 1,000 kilograms of hydrogen at the company’s demonstration stations and that it had gotten the cost of hydrogen “down below” $3 a kilogram.
Nikola’s filing also disclosed that its costs associated with regulatory and legal matters ballooned to $24.7 million in 2020, with $19.5 million of that coming in the fourth quarter. The company has also set aside $8.1 million toward Milton’s legal fees under its contract with him, even though he left the company on September 20, the day after he was served with the federal subpoena. It has paid $1.5 million of that so far.
Late Thursday the company reported a $147.1 million loss in the fourth quarter, up from a $26.3 million loss in the same period the prior year. For the year, Nikola lost $384.3 million, four times the loss it posted in 2019.
The company did say that it remains on track to deliver its first semi, the Nikola Tre, to customers before the end of this year. But during a conference call Thursday it revised the number of vehicles it expects to deliver in 2021 to only about 100. With a price of roughly $300,000 per truck, that would give Nikola revenue of about $30 million. It has collected virtually no sales revenue to date.
Nikola went public in June 2020 and its stock quickly shot higher, doubling in value in one day shortly after it started trading. In August, the company announced a deal with a major refuse company for up to 5,000 electric garbage trucks it had yet to design. In September, just days before the short-seller made the allegations about the company’s claims, Nikola announced a deal which would have given General Motors (GM) an 11% stake in Nikola and have the two automakers cooperate on an electric pickup truck.
But the stock collapsed in the wake of the allegations and has never recovered. It was trading Friday at less than half of its value before the allegations became public. The deal for the garbage truck was dropped and GM pulled out of its deal as well.
The company said it will now focus on heavy-duty trucks and hydrogen fueling stations.
“In the fourth quarter of 2020, Nikola made the necessary changes to refocus and realign the company,” CEO Mark Russell said when announcing company results on Thursday.
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