Nikola Corp., the electric truck startup that once captured Wall Street’s attention, has filed for Chapter 11 bankruptcy protection, signaling the latest downfall in the volatile electric vehicle sector.
The Phoenix-based company announced Feb. 19 that it plans to auction off its assets, pending court approval, and has $47 million in cash to fund the bankruptcy process. The move follows years of financial struggles, executive scandals and production setbacks that ultimately led to Nikola’s demise.
"Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate," Nikola CEO Steve Girsky said in a statement. "Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the company and its stakeholders."
The bankruptcy marks a dramatic fall for Nikola, which was once valued at over $30 billion in 2020 -- more than Ford Motor Co. at the time. The company had secured a multibillion-dollar partnership with General Motors, with the Detroit automaker initially agreeing to take a $2 billion stake in Nikola.
However, that deal unraveled after Hindenburg Research accused Nikola’s founder and former CEO Trevor Milton of fraud. Milton was convicted of wire fraud and securities fraud in 2022 for misleading investors about the company’s technological capabilities.
Despite efforts to recover under new leadership, Nikola struggled to maintain financial stability. Since launching production of its all-electric and hydrogen fuel cell semitrucks in 2022, the company has produced only 600 vehicles, many of which have been recalled due to defects, costing Nikola tens of millions of dollars.
The company had warned investors that it only had enough cash to operate through early 2025, but its capital continued to dwindle. By the end of the third quarter of 2023, Nikola reported $198 million in cash, a stark contrast to its earlier financial peak.
Girsky, a former GM executive and investment analyst, was instrumental in taking Nikola public through a special purpose acquisition company (SPAC) in 2020, a move that inspired a wave of other EV startups to do the same. However, many of those companies have also struggled, facing regulatory scrutiny, financial hardships and leadership turnover.
Nikola’s stock, which once closed at nearly $80 per share in June 2020 (adjusted for a 1-for-30 reverse stock split), has traded below $2 per share since December 2023.
The court-supervised sale process will determine the fate of Nikola’s remaining assets, while its once-lofty vision of revolutionizing the trucking industry now serves as a cautionary tale of the challenges facing EV startups in a competitive and capital-intensive market.
