DETROIT, Nov 30 (Reuters) - General Motors Co and
Nikola Corp on Monday announced a reworked agreement on
a fuel-cell partnership that eliminates an equity stake in the
startup for the Detroit automaker as well as plans for building
Nikola's electric pickup truck, sending Nikola shares tumbling
almost 25%.
In September, the companies announced a deal under which GM
would supply batteries, a chassis architecture, fuel cell
systems and a factory to build Nikola's proposed Badger electric
pickup in return for an 11% stake and $700 million.
But the deal came into question after a short seller
criticised Nikola as a fraud, something Nikola has denied.
The new agreement, a non-binding memorandum of understanding
that doesn't expire until the end of 2021, is subject to
negotiation and a definitive deal, Nikola and GM said in
separate statements.
Under the new deal, GM will supply its fuel-cell system for
Nikola's Class 7 and Class 8 commercial semi-trucks, Nikola
said. The companies are also discussing Nikola's potential use
of GM's Ultium electric battery system in its commercial
trailers.
Nikola officials said the new deal focuses on the fuel-cell
side of the business, where they see the greatest potential.
They also said they remain confident of signing a deal by year
end with an energy partner to build hydrogen-refueling stations.
Nikola's shares sank almost 25% in afternoon trading, while
GM's fell 1.7%.
J.P. Morgan analyst Paul Coster said in a research note GM's
decision not to take a stake in Nikola as originally planned
would weigh on Nikola's shares, but longer term, the new
agreement was positive for the startup as it could now focus on
its commercial truck business.
In addition, the lock-up period preventing the sale of 161
million shares expires on Tuesday. That could put even more
pressure on Nikola's value if they are sold because the stock's
current float is only 117 million shares, Deutsche Bank analyst
Emmanuel Rosner said. Most of the locked-up shares are owned by
founder Trevor Milton, who resigned in September.
A spokesman for Milton, who owns 91.6 million shares in
Nikola, declined to comment on his intentions for the stake.
Nikola also said on Monday it would refund all previously
submitted order deposits for the Badger as that rollout was
dependant on a manufacturer partnership. Nikola officials said
the Badger was "paused indefinitely."
Heavy trucks remain our core business and we are 100%
focused on hitting our development milestones to bring clean
hydrogen and battery-electric commercial trucks to market,"
Nikola Chief Executive Mark Russell said in a statement.
GM said Nikola will pay upfront for the capital investment
necessary for the fuel-cell capacity. The fuel-cell system will
be built at GM's Brownstown Charter Township battery plant in
Michigan.
(Reporting by Ben Klayman. Additional reporting by Munsif
Vengattil in Bengaluru. Editing by Kirsten Donovan, Jane
Merriman and Bernadette Baum)