Trevor Milton, the founder and executive chairman of Nikola, has resigned amid allegations he misled investors about the prospects of the automotive company, which is developing a line-up of hydrogen- and battery-powered trucks.
The Phoenix-based startup, which went public this year, was called out by short-seller Hindenburg Research in a report released on Sept. 10. The bombshell report came just days after Nikola entered an alliance with General Motors, with the Detroit automaker planning to supply key components and produce the Nikola Badger pickup. Since then, the Securities and Exchange Commission and the Department of Justice have both reportedly launched investigations.
For his part, Milton said on Twitter Sunday night that he would defend himself against what he described as “false allegations.” In the meantime, he has “made the difficult decision to approach the board and step aside,” according to a statement issued by Nikola.
“Nikola is truly in my blood and always will be, and the focus should be on the company and its world-changing mission, not me,” Milton said in the statement.
With Milton stepping down, Steve Girsky, 58, will become chairman. Girsky was a long-time Wall Street analyst who became vice chairman of General Motors as part of the government-led bailout of the automaker a decade ago. After leaving GM, Girsky led a so-called blank-check company, VectorIQ, which merged with Nikola and helped take it public in June. When the alliance with GM was announced this month, CEO Mary Barra credited Girsky with helping to pull it together.
Nikola won favor with investors early on, making Milton’s initial share of 35 percent worth an estimated $9 billion. Since the Hindenburg report was released, however, the shares have fallen by nearly one-third.
Founded in 2015 in Salt Lake City, Nikola initially focused on producing a pair of heavy-duty semi-trucks that would use hydrogen fuel-cell technology to produce zero emissions. Fuel-cell technology is seen as a potential alternative to battery power because it can provide significantly longer range. The downside is a lack of hydrogen fueling stations, but Nikola laid out plans to set up its own distribution network along major trucking routes.
More recently, Nikola announced plans to produce a full-size pickup, the Badger, and enhance its appeal by offering several different versions. One would run solely on batteries, while others would use a hybrid hydrogen and battery powertrain system.
As part of the deal with GM, Nikola would effectively abandon development of its own battery and hydrogen drive systems, with GM supplying the technology. GM also agreed to assemble the Badger at one of its new EV plants. All told, Milton said at the time, the alliance would save Nikola billions, while GM would gain an 11 percent stake.
There had been concerns that GM might choose to step back from the partnership now that questions have been raised about possible fraud by the Hindenburg report.
In a statement issued Monday morning, however, GM acknowledged Milton’s decision and said it would continue to “work with Nikola to close the transaction we announced nearly two weeks ago to seize the growth opportunities in broader markets with our Hydrotec fuel cell and Ultium battery systems, and to engineer and build the Nikola Badger.”
The short-seller’s report, titled, “How to Parlay an Ocean of Lies into a Partnership with the Largest Auto OEM in America,” outlined what it claimed to be “an intricate fraud built on dozens of lies.”
Among other things, Hindenburg claimed Nikola had staged a video to make it appear one of its initial semi-truck prototypes was cruising down a hill. At this point, Nikola has produced and sold no vehicles of its own, though it claims to be moving forward on setting up a plant to produce heavy-duty freight haulers like the Nikola One. The facility, based outside Phoenix, is expected to go into production in 2023.
A day after the short-seller’s report was issued, Nikola released a statement saying its “legal counsel proactively contacted and briefed the U.S. Securities and Exchange Commission.”
Despite the ongoing turmoil, Nikola CEO Mark Russell said the company remains committed to its objectives and creating value for shareholders.
“Our priorities remain unchanged and, in collaboration with our partners, we are laser-focused on executing on our strategic initiatives and laying the groundwork to become a vertically integrated zero-emissions transportation solutions provider,” Russell said, according to a company statement.