Nikola Corporation (NASDAQ:NKLA) woes edged higher at the close of business on the last day of trading in November. The stock fell by more than 20% as General Motors Company (NYSE:GM) confirmed it was severing ties with the electric vehicle startup.
The stock exploded after General Motors confirmed it was in the process of acquiring stakes worth $2 billion in the young start-up. The deal appears to have fallen through in the aftermath of reports that the company has been sharing misleading information about its battery and fuel cell technologies. The two have also ended plans to build the Badger, Nikola’s pickup truck jointly.
GM-Nikola Break up
The $2 billion deal was initially viewed as a no-lose situation for the auto giant until short-seller Hindenburg Research unveiled a report indicating a series of fraud allegations against the electric startup. The result was the resignation of founder and executive chairman Trevor Milton. The allegations have already triggered a probe from the Department of Justice and Securities Exchange Commission.
Nikola’s sentiments could edge even lower with the termination of the $2 billion dollar deal poised to kick start a volatile week. Insiders are now able to sell for the first time up to 166 million shares of the company initially prohibited for trading. A majority of the shares are held by Milton, at 91.6 million.
Amid the termination, General Motors is to continue supplying Nikola with battery systems planned to develop the semi-trucks. However, Nikola is to return all previously submitted order deposits for the development of the badger.
The termination of the Nikola partnership does not in any way affect General Motors’ ambitions on the development of EV cars. The auto giant has confirmed the dumping of more money on electrification plans. The company is to spend close to $27 billion on electric and autonomous cars through 2025. By 2025, the company intends to launch 30 new electric vehicles.