According to media reports, on February 19, U.S. hydrogen and electric truck manufacturer Nikola announced that it has filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code and will seek to sell its assets.
In a statement, Nikola CEO Steve Girsky said, "Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate. Unfortunately, despite our best efforts, we have been unable to overcome these significant challenges." Previously, Nikola had experienced multiple management changes, a sharp decline in stock price, and allegations from short sellers.
Nikola stated that it has decided to initiate a sale process to maximize company value and ensure an orderly shutdown of operations. The company will continue providing limited support services for Nikola trucks already in use until the end of March and will maintain some of its hydrogen fueling operations.
Regarding Nikola's bankruptcy, Sarah Foss, head of legal at credit and restructuring analysis firm Debtwire, commented, "Nikola's struggles, combined with increasing competition, operational challenges, and high costs across the EV industry, have all contributed to this outcome."
When Nikola went public in 2020, it told investors that it would produce and sell thousands of hydrogen fuel cell and battery-powered electric trucks annually. In December 2021, Nikola delivered its first vehicle. In 2023, a series of fire incidents involving its electric trucks led to a full vehicle recall and raised safety concerns.
In 2024, Nikola ramped up production of its hydrogen fuel cell-powered trucks. However, fleet operators were reluctant to invest in electric trucks due to high borrowing costs, making commercialization difficult. The company delivered fewer than 400 trucks in 2024, losing hundreds of thousands of dollars on each sale. In the first three quarters of 2024, Nikola generated only $64 million in revenue while burning through hundreds of millions of dollars in cash annually.
According to bankruptcy filings submitted to the U.S. Bankruptcy Court in Delaware, Nikola listed assets between $500 million and $1 billion, with estimated liabilities between $1 billion and $10 billion. At the time of filing, the company had only $47 million in cash on hand.
On February 19, Nikola's stock price dropped about 38%, leaving its market capitalization below $50 million-a stark contrast to its peak valuation of around $27 billion in 2020 when its market value even surpassed that of Ford Motor Company.
Nikola is the latest electric vehicle manufacturer to struggle amid weak demand, rapid cash burn, and financing challenges. Several EV startups that went public during the pandemic, including Fisker, Proterra, and Lordstown Motors, have filed for bankruptcy in recent years due to high interest rates and declining demand, which have drained funding for these capital-intensive businesses.
Even Tesla, under Elon Musk, is facing declining demand. Despite promotions and incentives, high borrowing costs and aging vehicle models have weighed on sales, leading to Tesla's first annual sales decline in 2024.
