Nikola Corporation NKLA has announced its long-awaited partner for its upcoming Nikola Badger electric battery and hydrogen-powered pickup truck.
What Happened: Nikola announced a partnership with General Motors Company GM to help engineer and build the Nikola Badger. The deal will see GM take an 11% stake in Nikola through a $2 billion equity deal. Nikola went public via a SPAC formed by Steve Girsky, a former General Motors executive.
“By joining together, we get access to their (GM’s) validated parts for all our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production,” said Nikola Founder and Chairman Trevor Milton.
Why It’s Important: Nikola differs from rivals by offering electric battery and hydrogen power in the same pickup truck. The battery version of the Badger will have a range of 300 miles on a single charge. The combined version will offer a 600-mile range, higher than rivals like Tesla’s TSLA Cybertruck.
Along with the partnership announcement, Nikola is also lowering the cost of pre-order reservations. Nikola is offering $100 reservations in celebration of the deal. Nikola announced in July it had sold out of 1000 $5000 deposit packages. Nikola’s reservations were offered for $250 to $1000. Tesla announced 146,000 reservations for its Cybertruck through $100 deposits.
"This news is a huge shot in the arm for Nikola and cements credibility," Wedbush analyst Daniel Ives wrote in a note. "There have been many skeptics around Nikola and its founder Trevor Milton's ambitions over the coming years, which now get thrown out the window with stalwart GM making a major strategic bet on Nikola for the next decade on the EV and fuel cell front."
Milton told Yahoo Finance he wanted to see Nikola take the pickup throne from Ford Motor Company F, which sold 900,000 Ford F-150 pickup trucks last year.
What’s Next: Nikola will debut the Nikola Badger at its Nikola World event held Dec. 3-5 in Arizona. A new factory in Arizona will add an annual capacity of 35,000 trucks, taking the company to an annual production range of 70,000.
"For GM given its strategic goal around EV battery technology for the coming years and its massive $20 billion of investments earmarked for electric and autonomous vehicles by 2025, we view this as a smart strategic bet at the right time," Ives wrote in the note.
Nikola shares were surging, up 39% to $49.75. Shares of GM were up 8% to $32.76.
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