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GM backs out of stake in Nikola, cancels plan for 'Badger' electric pickup

By Jamie L. LaReau, Detroit Free Press on

Published in Business News

DETROIT — General Motors and Nikola Corp. have a deal, though it's a much smaller one compared with the one first struck in September.

In a non-binding memo of understanding signed by GM and Nikola on Monday, GM will now supply the fuel-cell technology to make commercial long-haul trucks for Nikola and nothing more — with no equity stake in Nikola as previously proposed.

This pending transaction comes after controversies that swamped Nikola since the original deal was announced Sept. 8 in which GM would have gotten 11% equity in the company to build an electric heavy-duty pickup for Nikola called the Badger.

In this new deal, which remains subject to final negotiation, GM will be paid for its Hydrotec fuel-cell technology that goes into Nikola's commercial zero-emission semi-trucks for use in the medium- and long-haul trucking sectors.

The deal is similar to a standard supplier agreement where GM, in this case, is the supplier to Nikola.

GM declined to comment on how much the deal could be worth for it financially. The benefit comes in the supply agreement validating GM's fuel cell technology "expertise and development," said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain, in a statement.

 

"Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future," Parks said.

The 11% stake in the previous tentative deal would have been worth about $2 billion to GM in exchange for building the Badger, which had been planned to go on sale in 2022.

But shortly after that deal was announced, a short-sellers report accused Nikola of "intricate fraud." Nikola's stock price plummeted on that news followed by the resignation of its founder Trevor Milton, eroding GM's potential value in the company.

The deal was put on hold and GM and Nikola went back to the bargaining table with a Dec. 3 deadline to either make a deal or call it off.

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