Scandal-hit AZ-based electric truck maker seeks more capital amid stock price drop

Jeff Kronenfeld
A Nikola truck drives by the U.S. Capitol.(Nikola Corporation)

By Jeff Kronenfeld / NewsBreak Pinal County, AZ

(Pinal County, AZ) Like a truck rolling downhill, Phoenix-based electric and fuel cell vehicle manufacturer Nikola saw its stock price drop by 3.98% Tuesday -- down 48.74% since the beginning of the year.

This drop comes amid a CEO shakeup and the company seeking to sell stock to raise up to $400 million as manufacturing and resource costs increase.

All this could signal more troubles for the company whose founder and former CEO Trevor Milton resigned in September 2021 following his indictment on securities and wire fraud charges earlier that year. It could also throw a wrench in Pinal County’s efforts to position itself as the center for alternative vehicle manufacturing.

Michael Lohscheller, the current president of Nikola Motors, will take over as the company’s president and CEO in January 2023, taking the reins from current chief Mark Russel, who stepped in after Milton’s departure.
Michael Lohscheller, current president of Nikola Motors.(Nikola Corporation)

Lohscheller has two decades of experience in the automotive industry and was formerly the CEO of German automaker Opel.

He will have a lot of brand building to do when he steps into the role.

A 2020 report by Hindenburg Research accused Nikola of making false claims about producing hydrogen for $3/kg, roughly 81% cheaper than other producers. The report also claimed that Nikola faked a video of a Nikola One truck operating under its own power, when it was actually rolling down an incline.

A Nikola press release disputed this, maintaining that the company never claimed the vehicle was operating under its own propulsion, that the video was produced by a third party, and that investors were aware of the Nikola One’s technical capabilities. Nikola also claimed the report was released to financially benefit Hindenburg Research and other entities that had been short selling Nikola.

In December, Nikola agreed to pay a $125 million penalty to settle charges that it defrauded investors, though it did not admit or deny the Securities and Exchange Commission’s findings.

The chairman of Nikola’s board Steve Girsky said in a press release that he credited Russel and Lohscheller for getting the company back on the road to success.

“Under Mark’s leadership, we have started series production on our BEVs, advanced FCEV [fuel cell electric vehicles] pilot testing with select customers, expanded our strategic partner network, continued to build out our world-class Coolidge, Arizona manufacturing facility and progressed our hydrogen infrastructure capabilities,” Girksy said in a press release. “In his six months since joining our company, Michael has continued to bring an increased sense of urgency, high level of accountability, improved lines of communication and accelerated decision-making to Nikola Motor.”
A Nikola truck getting refueld.(Nikola Corporation)

Falling short of projections by two vehicles, Nikola produced 50 of its Tre BEV (Battery Electric Vehicle) trucks at its Coolidge factory and delivered 48 of these to dealerships during the same period from April 1, 2022, and June 30, 2022.

The company reported $18.1 million in revenue, though it still lost money overall. It hopes to increase production to between 300 to 500 vehicles total for 2022.

Despite its troubled past, the company continues to make bold moves. On August 29, Nikola commenced the purchase of battery manufacturer Romeo Power.

Another helpful development for Nikola was the passage of the Inflation Reduction Act on August 19, which included a $40,000 first-time tax credit for large zero-emission commercial vehicles.

The company employed 250 people at the Coolidge factory in April, with plans to bring on another 50 to 100 employees by years end, according to an email from the company quoting a Phoenix Business Journal article.

At the Coolidge factory, Nikola intends to increase production to five units per shift.

The company is also continuing with its Phase 2 expansion of the facility, which it states will increase production capacity to 20,000 trucks per year and is expected to be completed next year.

Governor Ducey did not respond to requests for comments, but he remains bullish on the company’s future, according to a press release from April.

“Nikola has become a driving force in Arizona’s rapidly expanding electric vehicle industry,” Ducey said. “Watching this innovative company grow and put down roots in Arizona has been truly incredible, and I know it’s only getting started. With the beginning of production at this manufacturing facility, Nikola is clearly in the driver’s seat of the future of transportation and commerce.”

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Jeff is an award-winning freelance journalist covering news, business, science and the arts. His work has been published in Discover Magazine, Vice, the Phoenix New Times and other outlets.

Tempe, AZ

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