Nikola (NKLA.O) said on Wednesday it had filed for Chapter 11 bankruptcy protection and would pursue a sale of its assets, the latest electric-vehicle maker to stumble after grappling with tepid demand, rapid cash burn and funding challenges.
The development ends a challenging journey, which included several leadership changes, a plummeting share value and short-seller allegations.
EV firms that went public during the pandemic, promising to revolutionize the sector, such as Fisker, Proterra and Lordstown Motors have filed for bankruptcy in recent years as funding for the capital-intensive operations dried up due to high interest rates and flagging demand.
"Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate," CEO Steve Girsky said in a statement, Reuters reported.
"Unfortunately, our very best efforts have not been enough to overcome these significant challenges," he added.
Elon Musk-led EV pioneer Tesla (TSLA.O), reported its first drop in annual sales in 2024 as high borrowing costs and an aging lineup crimped demand, despite offers and incentives.
Nikola, which started off making battery-powered semi trucks and pivoted to electric trucks that use hydrogen, said it decided to initiate a sale process of its assets to maximize value and ensure an orderly wind down.
The firm will continue some operations for trucks in the field and some hydrogen-fueling operations through the end of March.
Nikola listed assets of between $500 million and $1 billion, and estimated its liabilities were between $1 billion and $10 billion, according to a court filing.
Phoenix, Arizona-based Nikola was founded more than a decade ago. It went public in June 2020 and delivered its first vehicle in the December of the following year.
Nikola ramped up production of its hydrogen-powered trucks in 2024, but still lost hundreds of thousands of dollars on every vehicle sold as fleet operators were reluctant to invest in electric truck adoption amid high borrowing costs.
The stock fell about 45% on Wednesday premarket to around 41 cents.
STRUGGLING FINANCES
In the early days of the pandemic, Nikola struggled to increase its rate of production due to supply chain snags. High costs related to the ramp-up of manufacturing aggravated its woes.
Nikola's cash and cash equivalents dropped sharply to $198.3 million at the end of September, compared with $464.7 million at the end of 2023.
On Wednesday, the company said it was entering Chapter 11 proceedings with $47 million in cash on hand.
Its shares have lost more than 99% of their value since going public in 2020.
The stock has fallen below the $1-mark several times and the company resorted to a reverse stock split last year to comply with Nasdaq's listing rules.
SHORT-SELLER ALLEGATIONS
Shortly after the company went public in 2020 through a merger with a blank-check company, it was hit by a scathing report by short-seller Hindenburg, which disbanded earlier this year. Nikola had denied the allegations.
The report alleged that Nikola had rolled one of its trucks down a hill, portraying it as a functioning truck that could run under its own power, misleading investors.
Founder Trevor Milton was convicted of fraud in 2022 and sentenced to four years in prison the following year.
