Nikola Declares Bankruptcy as Startup Previously Valued More Than Ford Exhausts Its Funds | Carscoops

      The stock of the electric truck company has plummeted by 95 percent over the year leading up to January, and no one has intervened to provide assistance.

      Startup Nikola has filed for Chapter 11 bankruptcy after being unable to secure financial support.

      In 2020, the electric truck manufacturer's valuation was $27 billion, surpassing that of Ford.

      Founder Trevor Milton received a four-year prison sentence in 2023 due to fraud allegations.

      This week, Nikola joined the ranks of other struggling EV startups, such as Fisker, Proterra, and Lordstown Motors. The electric truck manufacturer filed for Chapter 11 bankruptcy after exhausting its cash reserves and failing to find a savior.

      Headquartered in Phoenix, the company has faced challenges for some time, grappling with low demand, declining share prices, and the repercussions of a scandal that led to its founder’s four-year imprisonment for fraud.

      Nikola has expressed intentions to sell its assets, which it estimates to be worth between $500 million and $1 billion. However, court documents reveal its debts amount to between $1 and $10 billion, according to Reuters.

      “Like other players in the electric vehicle sector, we have encountered various market and macroeconomic factors that have hindered our operations,” stated Nikola CEO Steve Girsky.

      “Regrettably, our utmost efforts have not sufficed to overcome these substantial obstacles, and the Board has concluded that Chapter 11 is the best course of action for the Company and its stakeholders under the current circumstances.”

      It's astonishing to recall that five years ago, during the peak of the EV startup craze, Nikola was more valuable than Ford. In 2020, Nikola had a market capitalization of $27 billion, even though it had never sold a single vehicle and had signed a multibillion-dollar agreement with GM aimed at giving the Detroit company an 11 percent stake, providing battery and hydrogen technology, and manufacturing the startup’s Badger electric pickup.

      The Badger was expected to boast 906 hp (919 PS) and a range of 600 miles (966 km) in its fuel-cell version (a purely electric model was also in the works), but it never progressed to production. Although Nikola managed to get its large trucks onto American roads, it faced significant challenges. The first electric rig was produced in 2021, but the company encountered issues, including vehicle fires that led to a safety recall announcement.

      Nikola was also embroiled in controversy when founder Trevor Milton was convicted of fraud for staging a video that falsely depicted one of the brand’s trucks driving autonomously when it was actually just rolling downhill. Milton also made deceitful claims that misled investors into thinking the company was closer to production than it actually was.