General Motors took a US$2-billion equity stake in Nikola and partnered with the truck maker to engineer and manufacture its Badger bakkie, sending its shares soaring in early trading.
GM will make in-kind contributions to take an 11% stake in Nikola and get the right to nominate one director to the company’s board, according to a statement on Tuesday. Nikola’s stock jumped more than 50% before the market open, while GM surged almost 9%.
The partnership gives Nikola — which has yet to generate any meaningful revenue — an immediate boost of legitimacy while also benefiting GM. The Detroit-based automaker expects to receive more than $4-billion in perks from the deal. In addition to the equity value of the shares, it will be paid to manufacture the Badger and supply batteries and fuel cells to Nikola.
Phoenix-based Nikola first unveiled the Badger in February and started to take pre-orders from buyers in June. The companies expect the truck to start production by the end of 2022. — Reported by Ed Ludlow, (c) 2020 Bloomberg LP
