The manufacturer of new types of trucks is an “ocean of lies” and practices “complex fraud”, according to an analyst report. Nevertheless, his German partners remain loyal to him.
Trevor Milton is known for full-bodied announcements. He said that Nikola, the truck specialist he founded, could one day become bigger than Tesla. He was able to get Wall Street excited about his company and went public that year. In the meantime, it was worth more than the car manufacturer Ford, without being able to present a market-ready product or significant sales. He found well-known partners in the industry, including General Motors (GM), the commercial vehicle manufacturer Iveco and the German automotive suppliers Bosch and Mahle.
But now he has found himself in considerable need of explanation: A few days ago the financial analysts at Hindenburg Research published a detailed report with serious allegations that hit like a bomb. You accuse Nikola of “complex fraud” and say the company is an “ocean of lies”. “We have never seen such a level of deception in a public company,” they write. According to a report by the Bloomberg news agency, the American Securities and Exchange Commission is now also dealing with the allegations.
Analysts themselves bet on falling Nikola price
Hindenburg makes a long list of detailed allegations, the core of which is often that there is a lot of hot air in the case of Nikola. The analysts are vulnerable, however, because, as they themselves admit, they are short sellers of Nikola shares, that is, they are betting on falling prices. Nikola sharply denied the allegations and said she wanted to involve the SEC herself.
The company has also recruited a law firm to investigate possible legal action against Hindenburg. “We have nothing to hide,” it said in a message. However, the allegations have caused movement on the stock exchange. A week ago, when Nikola announced the cooperation with GM, the share price had risen to $ 50. Since then, things have clearly gone downhill. On Tuesday in the course of trading, the share cost around $ 33.
So far, Nikola has received support from among his partners. In the Hindenburg report, for example, a Bosch spokesman is quoted as saying that copies of Nikola’s “Tre” truck are not yet ready, even though Milton had said a few weeks earlier that five of them were just rolling off the assembly line in a plant in Ulm.
Bosch now announces that the speaker’s statements have been taken out of context. Bosch has been a supplier to Nikola Motor for a number of years. Both companies planned to “continue to work together in the future – and also on fuel cells”.
Milton posted photos of Nikola trucks on Twitter and said they came from Ulm. He wrote: “Do they look counterfeit?” According to Nikolas information, the trucks built so far are pre-series vehicles. Series production is scheduled to begin in the final quarter of next year.
The Ulm plant is owned by Nikola partner Iveco, and the “Tre” model is based on an Iveco platform. Iveco did not want to officially comment on the Hindenburg report. From the company it is said, however, that the allegations made are incomprehensible. Even after the outbreak of the corona pandemic, work on the model continued, as Iveco and Nikola employees connected using special software programs for engineers from home. The project is therefore still on schedule.
Nikola has to admit one claim
Around a dozen Nikola employees are currently busy on site installing the software for engine and battery control in the first of the five vehicles and correcting possible errors. GM has now also spoken out. Chief Executive Mary Barra said the partnership was “properly screened” and that her company has “a very capable team” for such things.
Although Nikola rejects most of Hindenburg’s allegations, the company felt compelled to confirm a particularly striking episode in the report. It is about the prototype of the truck model “One”, which Milton described as fully functional.
The Hindenburg report states that a promotional video showing the truck driving at a fast pace along a lonely desert road was a “clever trick”. Nikola dragged the vehicle to the top of a hill and then let it roll down, but in the video it looked as if the road was flat. The company did not deny the allegation, but said in its defense that it never claimed the truck was self-propelled.