Hydrogen Hopeful Nikola Nears Bankruptcy

Hydrogen truck maker Nikola is considering a sale or a restructuring as it prepares to file for bankruptcy, the Wall Street Journal has reported, citing unnamed sources close to developments.

The company enjoyed a lot of attention when it went public in 2020 despite not having sold any products at the time. Even so, its market cap at one point hit $30 billion, making the company temporarily more valuable than Ford. Later, however, a short seller revealed its chief executive had overhyped Nikola’s business plan to investors, for which he was sued and convicted, and the company’s market value collapsed.

‘;
document.write(write_html);
}

Nikola last year produced a total of some 80 hydrogen trucks, on which it incurred a loss of close to $200 million. According to the Wall Street Journal report, the company’s biggest challenge turned out to be the development of batteries that were light enough and energy-dense enough to make sense.

“Companies and their investors have spent hundreds of millions of dollars trying to design and manufacture lighter, more efficient batteries at scale,” Colin Adams, partner at a restructuring adviser, told the WSJ. “Right now, you’re seeing the results in the competition between capital and physics. In this first round, physics appears to be the winner.”

The Financial Times, meanwhile, focused its report of the news on the financial restructuring option for Nikola. It cited a company spokeswoman as saying “Nikola continuously assesses its financial position and liquidity needed to operate its business. As part of that review, the company is evaluating a variety of options, which includes a financing as part of a financial restructuring.”

To date, Nikola only has cash for a few more months, with the balance on its books at around $200 million, after in December it organized a funding round that generated $300 million in debt and equity.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com