Nikola, the American electric and hydrogen vehicle startup once hailed as the “next Tesla,” filed for bankruptcy protection on February 19 in Delaware.
While Nikola plans to restructure its business under court supervision to recover, its prospects appear grim due to a loss of credibility from past fraudulent activities and substantial debt issues.
At its peak, Nikola garnered enough attention to surpass Ford’s market capitalization. However, the company’s downfall began when it was revealed that it had falsely promoted hydrogen truck technology that was not yet fully developed.
Despite launching an electric truck in 2022 and a hydrogen truck in 2023, Nikola faced a severe financial crisis due to poor sales. The bankruptcy filing reveals that the company holds $1 billion in assets against $10 billion in liabilities.
Nikola CEO Steve Girsky explained the decision to file for bankruptcy, stating that despite their efforts to increase capital and reduce debt, it wasn’t enough to overcome financial challenges.
Nikola’s founder, Trevor Milton, was sentenced to four years in prison in 2023 for fraudulently promoting non-existent hydrogen truck technology. The company’s troubles came to light in 2020 when activist fund Hindenburg Research released a report exposing Nikola’s hydrogen truck as non-functional. This led to a stock price collapse and mass investor exodus.
Nikola’s bankruptcy filing is part of a broader crisis facing American EV startups. In January, Canoo filed for bankruptcy after eight years of operation. The New York Times noted that even operating startups are experiencing plummeting stock prices, casting doubt on their profitability and long-term viability.
