Nikola Files for Bankruptcy Amid Financial Turmoil
Phoenix, Thursday, 20 February 2025.
On February 18, 2025, Nikola filed for Chapter 11 bankruptcy, burdened by $1-10 billion in liabilities and $47 million in cash, aiming to sell assets to fund operations.
Market Impact and Current Status
Nikola Corporation (NASDAQ: NKLA), once valued at $30 billion in 2020 [5], has seen its stock plummet dramatically, falling over 49% following the bankruptcy announcement [5]. The Phoenix-based electric truck manufacturer currently holds assets estimated between $500 million and $1 billion, while facing substantial liabilities between $1 billion and $10 billion [1]. The company maintains approximately $47 million in cash to fund operations during bankruptcy proceedings [2][8].
Operational Challenges
Despite beginning truck shipments in 2021, Nikola’s production struggled to gain momentum. By the third quarter of 2024, the company had manufactured only 600 vehicles, many of which required recalls due to defects [1]. The HYLA fueling network, a key component of Nikola’s infrastructure, has dispensed over 330 metric tons of hydrogen, with their fleet accumulating approximately 3.3 million miles across their FCEV and BEV truck platforms [2]. The company plans to maintain limited service and support operations, including HYLA fueling, through March 31, 2025 [2].
Leadership Turbulence and Legal Issues
The company’s downfall was accelerated by legal troubles surrounding its founder, Trevor Milton, who was sentenced to four years in prison in December 2023 for fraud [1][5]. Milton was found guilty of misleading investors about Nikola’s technology and capabilities, including staging a promotional video of a truck rolling down a hill [1]. The controversy led to General Motors backing out of an equity deal that would have given GM an 11% stake in the company [1].
Industry Context and Future Prospects
Current CEO Steve Girsky acknowledges that like other companies in the electric vehicle sector, Nikola has faced significant market and macroeconomic challenges [2][8]. The bankruptcy makes Nikola the latest in a series of high-profile EV companies to collapse, following Lordstown Motors and Proterra [1]. The company is now seeking court approval to pursue an auction and sale process under Section 363 of the U.S. Bankruptcy Code [2], with the outcome pending court approval [8].