Nikola Corp NKLA outlined its post-recall strategy on Thursday, following the callback initiated in August for all its battery electric trucks due to multiple fire incidents. The company attributed the fires to coolant leaks within the battery packs and instructed dealers and customers to return the vehicles for monitoring and repairs.
What Happened: The ongoing investigation into the battery issues involves three independent groups in addition to Nikola’s team, as revealed by CEO Steve Girsky during the company’s third-quarter earnings call.
“During these investigations, it was discovered that additional process and design changes may be necessary, and that cell level issues may need to be addressed beyond the initially identified coolant manifold replacement,” Girsky said.
To expedite the return of vehicles to customers, Nikola will replace the battery packs in the existing BEVs with new packs from an alternative supplier. These upgraded vehicles, dubbed “2.0,” will feature improved battery packs, scheduled departure charging, enhanced human-machine interface (HMI), and Bluetooth functionality. They are set to be returned to customers starting in the first quarter of 2024.
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Financial Hit: Nikola anticipates increased costs over the next nine to 12 months related to the battery electric truck recall, leading to an additional capital requirement of approximately $400 million.
In the third quarter, the company’s gross loss bloated to $125.5 million from $30.2 million a year earlier, while the expanded adjusted EBITDA loss widened to $188.6 million from $107.9 million. Adjusted EPS loss of 30 cents was greater than the feared 14 cents.
As of the end of the quarter, Nikola’s total cash and access to capital amounted to $705.8 million. According to CFO Stasy Pasterick, the company believes it has sufficient cash on hand to sustain operations into 2024, while also maintaining access to capital for funding business plan execution and costs associated with addressing the battery electric recall.
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