According to foreign media reports, Nikola, a U.S. hydrogen energy truck and electric truck manufacturer, said it is considering a financial restructuring.
“Nikola is constantly evaluating its financial position and the liquidity required to operate its business. As part of the review, the company is also evaluating various options, including financing as part of its financial restructuring,” said a Nikola spokesperson.
Nikola was listed through a blank check company in 2020. The company’s market value was as high as $30 billion, surpassing traditional automaker Ford. Investors hoped that Nikola would become the next Tesla at the time. But then, short-selling agency Hindenburg Research accused the company of a “complex scam” revealing that a truck that seemed to be driving on its own power in Nikola’s promotional video was actually sliding downhill, which caused Nikola’s stock price to plummet.
Later, federal prosecutors charged the company’s founder Milton with securities fraud and telecom fraud for misleading investors in Nikola’s technology. In 2022, Milton was convicted of three of the four charges and sentenced to four years in prison.
At the end of September last year, Nikola warned that its cash balance was less than $200 million and that the company’s liquidity was only enough to maintain operations for a few months. Meanwhile, Nikola faces difficulties in commercializing its technology, losing hundreds of thousands of dollars per car sold, and earning only $64 million in the first three quarters of 2024.
Currently, the market value of the company, headquartered in Arizona, USA, is only $63 million. Compared with its peak, its market value has fallen by 99%, and its stock price has fallen below $1 several times. Nikola is approaching bankruptcy as its debt and lease liabilities reach $350 million and has been struggling to raise funds and its cash balance has been declining. Bankruptcy will lead to the company’s sale of assets, reorganization or liquidation.
Investment bank Houlihan Lokey is providing proposals to Nikola, according to a person directly familiar with the matter. Bloomberg News reported last month that the truck maker is seeking to sell part of its business or sell the entire company.
If the bankruptcy is formally filed, Nikola will join several new U.S. electric vehicle manufacturing forces that raise or go public in 2021 and then seek court protection to avoid creditors’ pursuit, including Fisker, Arrival and Lordstown Motors.
In response to the above report, Nikola declined to comment on whether it would initiate a bankruptcy reorganization.