Nikola and General Motors announced a partnership between the two companies. With the new deal, GM obtains a portion of Nikola ownership. Moreover, the latest team-up attempts to boost presence in the Tesla-dominated electric vehicle market.
The Deal Between Nikola and GM
Through the agreement, GM receives 11 percent of ownership in the six-year-old startup. In turn, Nikola gives $2 billion in equity stakes to GM. Additionally, Nikola gains access to GM’s global safety-tested and validated parts and components. Accordingly, Phoenix-based Nikola can also utilize GM’s battery technology, including the Ultium battery system and Hydrotec fuel cell.
Moreover, GM gets to be the exclusive supplier of fuel cells for Nikola’s class 7/8 trucks. Nikola, founded in 2014, focuses on hydrogen fuel cell-powered semi-trucks. In addition, GM also takes the responsibility of engineering and crafting the Nikola Badger. However, Nikola retains the brand and marketing of the Badger.
Nikola delivers on yet another promise to its stakeholders…Nikola and @gm form strategic partnership, starting with the Nikola Badger. One step closer to a zero-emission future. #NikolaBadger https://t.co/MYuw7cscIz
— Nikola Motor Company (@nikolamotor) September 8, 2020
Leveraging Technology and Engineering
For Nikola’s founder and executive chair Trevor Milton, the deal gives them access to GM’s decade-worth of knowledge for Nikola’s programs. Milton said: “You couldn’t dream of a better partnership than this.”
Meanwhile, chief exec for GM, Mary Barra, told CNBC that her company seeks opportunities to leverage its Ultium Battery platform system and Hydrotec fuel cell technology. For her, the deal validates GM’s tech “and then bringing our engineering and manufacturing to the table.”
Barra further stated in a press release that GM boosts its presence in multiple high-volume EV segments. At the same time, it lowers costs for battery and fuel cells while raising profitability.
Together with the news, shares for both companies increased. Nikola grew by 45 percent in pre-market trading. Meanwhile, GM jumped by 11 percent.
Nikola Motor’s press release said that it remains an independent company. Both companies expect the completion of the deal before this month ends. Additionally, the deal must still undergo approval from anti-trust regulators.
The recent deal with Nikola follows another significant agreement for GM. Last week, the Detroit-based GM entered a deal with Honda. Both companies will collaborate to make vehicles for the North American market.