- Electric vehicle maker Nikola has filed for Chapter 11 bankruptcy protection, it said Wednesday.
- Company executives said in October that the EV maker only had enough cash to operate until Q1 2025.
- Nikola faced fraud allegations in 2020, leading to investigations and founder Trevor Milton’s conviction.
Troubled electric truck maker Nikola has filed for Chapter 11 bankruptcy protection, the company said Wednesday.
Nikola’s CEO, Steve Girsky, said in a statement that “various market and macroeconomic factors” had impacted the company’s financial situation and led to the bankruptcy filing.
“In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet and preserve cash to sustain our operations,” Girsky said.
“Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances.
This type of bankruptcy allows a company to reorganize and keep the business open, while paying creditors over time.
Nikola said it has also applied for authorization to sell its business, adding that it would keep its day-to-day operations running during the bankruptcy process. The company said it has $47 million in cash on hand to fund its activities.
Nikola’s stock has fallen from over $30 per share in early 2024, to around $0.70 now, a fall of over 95%. Shares were down almost 60% in premarket trade Wednesday.
The stock dropped 28% in a single day earlier in February when The Wall Street Journal first reported on a possible Chapter 11 filing.
The company, which went public in June 2020, has a long history of financial and operational challenges. On a third-quarter earnings call in October, the company, which lost nearly $200 million that quarter, said that it only had enough cash to run its business until the first quarter of 2025 and was exploring bringing on partners.
The company shipped 90,000 trucks in the third quarter, up from 3,000 in the third quarter of 2023.
In 2020, Nikola reached a valuation of $34 billion before it generated any revenue. As of Wednesday, Nikola’s market capitalization was $64 million. Its electric pickup trucks are a direct competitor to Tesla’s Cybertrucks.
In September 2020, the Securities and Exchange Commission and the Department of Justice launched investigations into Nikola after short-seller firm, Hindenburg Research released a report accusing the company of being “an intricate fraud” under founder and then-CEO Trevor Milton.
Milton denied the allegations in the report, calling it a “hit job for short sale profit.” He resigned from his position as executive chairman the same month. Girsky, a General Motors alum, took over as CEO in August 2023.
In September 2023, Milton was sentenced to four years in prison after being convicted of fraud. A year later, he was asked to pay Nikola nearly $168 million for making misleading statements about the company to the public.
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