EV truck startup Nikola accused of fraud

Analyst firm and short seller Hindenburg Research has released a damning report on EV vehicle startup Nikola Corporation alleging the company is an “intricate fraud built on dozens of lies”.

Nikola is hitting back and threatening legal action against the firm which comes just days after signing a US$2 billion equity stake deal with General Motors for production and development of the hydrogen fuel cell and battery electric pickup truck the Badger.

Nikola is also planning a range of hydrogen fuel cell electric semi-truck variants including the Nikola Tre, Nikola One, Nikola Two and NZT off-highway vehicle.

Hindenburg Research released its report on September 10 and shares in Nikola subsequently dropped more than 14% following the news.

The report claims to have gathered “extensive evidence” ranging from recorded phone calls, text messages, private emails and behind-the-scenes photographs detailing “dozens of false statements” by Nikola founder Trevor Milton.

“We have never seen this level of deception at a public company, especially of this size,” the report says.

Among allegations is that Nikola staged a video called “Nikola One in Motion” which showed the semi-truck cruising on a road “at a high rate of speed”.

“Our investigation of the site and text messages from a former employee reveal that the video was an elaborate ruse—Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill,” the report says.

Nikola released a statement denying the claims and says they are published by “an activist short-seller whose motivation is to manipulate the market and profit from a manufactured decline in our stock price”.

Nikola says the report is “replete with misleading information and salacious accusations directed at our founder and executive chairman”.

“To be clear, this was not a research report and it is not accurate. This was a hit job for short sale profit driven by greed.

“We have nothing to hide and we will refute these allegations. They have already taken up more time and attention than they deserve. We have retained leading law firm Kirkland & Ellis LLP to evaluate potential legal recourse, including with respect to the activist short seller and any others acting in concert.

“Nikola also intends to bring the actions of the activist short-seller, together with evidence and documentation, to the attention of the U.S. Securities and Exchange Commission.

“We respect the rights of investors and the integrity of the market and will be back to you after we have advanced the process with the SEC.

“Most importantly, Nikola remains focused on delivering on the promises we’ve made to our stakeholders,” the company says.

GM said in a statement that it stands by its recently announced deal with Nikola.

“We are fully confident in the value we will create by working together … We stand by the statements we made in announcing the relationship,” GM says.