Summary
- GM withdrew from a planned equity stake and strategic partnership with Nikola, avoiding potential losses and a humiliating distraction from its push toward electrification and autonomous driving.
- An announced memorandum of understanding between the two companies covers GM’s agreement to supply hydrogen fuel cell technology for a future Nikola heavy-truck model.
- The plummeting price of Nikola stock on the news of GM’s withdrawal prior to a definitive deal was a blow to NKLA shareholders and could spur lawsuits against the startup.
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GM (GM) chief executive Mary Barra is no doubt feeling relieved to have avoided the embarrassment and potential financial debacle that loomed shortly after the automaker agreed in early September to a potential $2 billion strategic alliance with Nikola Corp. (NKLA) that was scheduled to have closed next week.
Mary Barra, GM CEO Source: Time Inc.
At first glance, the agreement looked smart: It gave GM the chance to increase and speed up distribution of its zero-emission technology with no cash outlay, bearing only the cost of engineering Nikola’s proposed Badger EV pickup. For Nikola, the startup appeared to have snagged a deep-pocketed partner that could make up for its lack of expertise.
