NEWS COMMENTARY

Nikola's lopsided "partnership" with GM is just a play for credibility

Published:
September 10, 2020
Coverage:
Owning the Energy Transition More...
Activities:
Partnership
Average importance

In the announced "partnership," Nikola gives GM 11% equity in the company (worth about $2 billion at the time) and a board seat, and Nikola will pay GM for parts and manufacturing of the vehicle to the tune of roughly $2 billion. The announced deal confirms that Nikola's badger announcement was little more than a branding exercise; the steep price Nikola is paying GM to essentially serve as a contract manufacturer and component supplier is indicative of its lack of in-house technology development. GM is the real winner here; if Nikola fails – and it appears to be on that trajectory – the only downside for GM will be time spent engineering, homologating, and validating the vehicle and the potential branding fallout when Nikola does fail.

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