Nikola Bankruptcy: Electric Truck Maker Files Chapter 11

Nikola Corp. Files for Chapter 11 Bankruptcy

Nikola Corp., a hydrogen electric trucking innovator, initiated Chapter 11 bankruptcy proceedings on Wednesday. This action followed unsuccessful attempts to secure a buyer or additional funding necessary for continued operations.

From Silicon Valley Darling to Financial Distress

Once lauded as a prominent Silicon Valley venture, Nikola’s valuation peaked at $30 billion in June 2020 following its public listing via a special purpose acquisition company (SPAC). However, a sequence of controversies centering on its founder and former CEO, Trevor Milton, triggered a rapid decline in the company’s fortunes.

The company now intends to proceed with an auction of its assets, subject to court approval, as detailed in a recent regulatory filing.

Leadership Statement on the Bankruptcy

Steve Girsky, President and CEO of Nikola, explained that, like other companies within the electric vehicle sector, the company encountered challenging market and macroeconomic conditions. These factors hindered its operational capabilities.

“Despite diligent efforts to secure capital, reduce liabilities, and strengthen our financial position, we were unable to overcome these obstacles,” Girsky stated. “Chapter 11 is deemed the most viable course of action for the company and its stakeholders.”

Assets and Bankruptcy Funding

Nikola currently possesses approximately $47 million in cash reserves to facilitate the bankruptcy process.

The proposed bidding procedure will enable interested parties to submit legally binding offers for Nikola’s assets, independent of any existing debts or liabilities.

Key assets include the company’s platforms for Class 8 hydrogen fuel cell electric trucks and battery electric trucks. Nikola was also actively developing the HYLA hydrogen refueling highway project in California.

A Years-Long Decline

The bankruptcy filing marks the culmination of a protracted period of setbacks. Nikola was initially hailed as a successful example of a SPAC transaction, even securing a substantial agreement with General Motors.

This positive trajectory was disrupted when Milton faced accusations of fraud related to overstated claims regarding the company’s electric truck technology.

Fraud Allegations and Legal Proceedings

Prosecutors alleged that Milton had misled investors starting in 2019 by falsely asserting that Nikola had independently developed a truck and its battery technology, when in reality, components were sourced from other manufacturers.

A controversial marketing video depicting a truck seemingly driving autonomously also came under scrutiny. It was later revealed that the vehicle was simply coasting downhill.

Following the video’s release, a report by short-seller Hindenburg Research labeled the company as fraudulent, leading to Milton’s resignation in September 2020. He was convicted of wire and securities fraud in 2022 and is currently appealing a four-year prison sentence while on bail.

Financial Penalties and Stock Collapse

Nikola ultimately paid a $125 million penalty as part of a settlement with the U.S. Securities and Exchange Commission.

The company’s stock price experienced a significant collapse, resulting in substantial financial losses for both investors and the company itself.

Recent Attempts to Secure Funding

Nikola had been consistently striving to raise sufficient capital to sustain operations. In December 2024, the company attempted to raise $100 million through a common stock sale to address its debts and bolster its equity position.

This effort followed a warning to investors during its third-quarter earnings call in November, indicating that the company’s existing cash reserves were only sufficient to fund operations through the first quarter of 2025.

At the close of the third quarter, Nikola reported holding $198 million in cash.