No one asked for another season of the soap opera featuring Nikola Corp. NKLA and its convicted founder, Trevor Milton. But here we are.
Things are not looking bright
When last we left the ongoing drama that is Nikola Corp. and its convicted founder, Trevor Milton, the fuel cell truck and hydrogen fuel distribution company had been unable to collect on a $167.7 million arbitration award in November. Milton moved in January to get the award overturned.
Last month, Nikola sued Milton in the U.S. District Court for the District of Arizona, seeking a temporary restraining order (TRO) under the Arizona Uniform Fraudulent Transfer Act. It wanted to prevent Milton from selling or moving his company stock until he had paid up.
Judicial snub for Nikola
The court in Phoenix declined the TRO, saying Nikola lacked evidence and probably couldn’t prove its case. But it ordered Milton to answer questions about his sale of more than 37 million Nikola shares through his M&M Residual LLC from Feb. 22 through March 13.
That reduced Milton’s Nikola holdings to just under 13.3 million shares, a far cry from holdings that once made him worth billions on paper.
Nikola claims Milton is playing keep-away — “to frustrate, hinder and delay” the company’s ability to collect on the arbitration award” according to the lawsuit.
About half of the award — $83.3 million — would flow from Nikola to cover the unpaid portion of a $125 million Securities and Exchange Commission fine. The agency fined Nikola in 2021 in conjunction with Milton’s false statements about the company’s technological achievements and prowess.
Questionable boardroom tactics
Nikola theorizes Milton may have given shares to some existing stockholders to support the five candidates he is pushing for seats on Nikola’s board of directors. Milton nominated the alternate slate for June’s board meeting. That prompted Nikola to issue a preemptive news release urging shareholders to vote against the slate.
The five “have no public company experience, add no skills or experience to the board, and indisputably lack the depth of experience that the current Nikola board members bring to the company” Nikola said in the release.
Milton largely ignored the Arizona court order for discovery he was supposed to make by Wednesday.
Choppy waters ahead
In a filing with the Securities and Exchange Commission on Tuesday, the company said “Nikola’s disgraced founder and a convicted felon” is trying to take over the company by working with the purchasers of Nikola assets, notably the Badger electric pickup truck that was scrapped by Nikola after a tentative deal with General Motors to manufacture the truck fell apart.
When Nikola sold the Badger and Powersports assets to EMBR, a company majority-owned by Dave Sparks (aka “Heavy D”) and attorney Cole Cannon, the deal said Milton was to have no involvement because Milton “had caused enough reputational, financial, and operational damage to Nikola.” Sparks and Cannon are two of Milton’s board nominees.
“It is clear via social media and SEC filings that these provisions of the agreement were not adhered to, and as a result legal action is being taken against EMBR, Mr. Cannon and Mr. Sparks, as well as Mr. Milton,” the filing said.
Milton, who until recently owned about 4% of Nikola shares, faces four years in prison from his conviction in October 2022 on one count of securities fraud and two counts of wire fraud. No surrender date has been set. Milton is appealing his sentence.
Nikola founder Trevor Milton outside U.S. District Court in New York following his sentencing on fraud convictions. (Photo: Matthew Lee)
A Glimmer of Hope
Even with the distractions from Milton and the delisting threat, Nikola is making good on its pledge to begin returning recalled fire-prone battery-electric vehicles (BEVs) to customers.
A Nikola fuel cell electric vehicle hauls a repaired Watt EV battery-electric truck back to the truck-as-a-service provider. (Photo: Nikola)
Nikola recalled 209 Tre BEVs in August after battery fires in three trucks. No one was injured. The company paid to have the trucks returned to its plant in Coolidge, Arizona. Nikola removed the battery packs from Romeo Power, a wholly owned subsidiary it had purchased a year earlier because Romeo was in financial straits.
Nikola has not identified the source of replacement battery packs. But it has been testing packs from China-based Contemporary Amperex Technology Co. A spokesperson said the battery supplier or suppliers likely would be identified during the company’s first-quarter earnings call May 7.
The company expects all the recalled trucks to be back in customer possession by the end of the second quarter or early in the third.
“We’re starting to get our trucks back” Salim Youssefzadeh, CEO of truck-as-a-service provider WattEV, told me.
WattEV also received the first two Volvo VNR Electric models from a pending order of 50 trucks. Volvo recalled more than 400 VNR Electrics. Rather than ship and recall the trucks, it held on to them until they were fixed, Youssefzadeh said.
A Nikola fuel cell electric vehicle hauls a repaired Watt EV battery-electric truck back to the truck-as-a-service provider. (Photo: Nikola)
Nikola said Thursday it manufactured 43 fuel cell electric trucks during the first quarter and wholesaled 40 of them.
Treading Waters in Uncertain Tide
Class 8 electric trucks are big, expensive and hard to find adequate charging
The Dawn of Electric Revolution in Class 4-5 Trucks
Breakthrough in Medium-Duty Market
Medium-duty electric trucks in the Class 4 and 5 categories are paving their way with fewer obstacles than their heavy-duty counterparts. According to Alex Voets, the general manager of Velocity EV, the exclusive distributor of Daimler Truck’s Rizon brand, these trucks might just become a habit-forming presence in the market.
New Electric Competitor on the Block
The arrival of cabover models from Japan at Velocity EV dealerships marks the advent of a new era. With dedicated efforts towards educating consumers, misconceptions about transitioning from traditional gasoline or diesel to battery-powered trucks are gradually being dispelled. Rizon trucks are adaptable to both easily available alternating current (AC) and less common direct current (DC), offering versatility to users.
“Understanding the nuances of these new technologies early on, getting a grasp of electric powertrains, and acclimatizing drivers to these cutting-edge advancements are crucial steps before making significant decisions either in expanding the usage of these vehicles or incorporating them on a larger scale,” Voets stated.
Pioneering the Electrification Journey
Rizon presently stands as the sole major truck manufacturer offering the Class 4-5 chassis cab that allows for various upfitting options, from cargo boxes to dump bodies. However, competition is on the horizon, with Isuzu Motors Ltd. from Japan gearing up to introduce a Class 5 truck in the 2025 model year, boasting a 19,500-pound gross vehicle weight rating, a proprietary battery-electric platform, and an innovative cab design.
The electric truck market, akin to the sluggish uptake of electric cars, is experiencing a delay in adoption that defies expectations, partly due to setbacks in enforcing the California Advanced Clean Fleets rule. Despite this, Alex Voets anticipates a turning point for electric trucks as they become more ubiquitous on the road.
“The real tipping point lies in witnessing these vehicles in actual operation,” Voets remarked. “As trucks start hitting the streets, conducting deliveries, a wealth of firsthand information becomes available in the market. Customers can now engage in dialogues based on real-world experiences, rather than relying solely on manufacturers’ claims.”
Fostering Competition and Innovation
Motiv Power Systems, with a rich 15-year history in building electric chassis for medium-duty trucks, stands as a testament to the symbiosis between experience, regulations, and incentives in propelling the electric truck market forward. Founder Jim Castelaz remains optimistic about Motiv’s trajectory, buoyed by the evolving landscape of the industry.
General Motors’ Fuel Cell Endeavors
With over half a century dedicated to hydrogen fuel cell development, General Motors is finally making substantial strides in nurturing commercial partnerships. The automaker’s foray into more power-intensive projects underscores the increasing value it places on leveraging hydrogen fuel cell technology.