Iveco is set to loosen its ties with U.S. startup Nikola as it purchases the full ownership of their joint venture, which develops battery electric and fuel cell heavy-duty trucks.
Iveco and Nikola formed the joint venture in 2019 to help Iveco, then part of CNH Industrial, to catch up with large European rivals such as Daimler Truck and Volvo.
Meanwhile, Nikola and other U.S. startups face challenges as their market valuations have decreased recently. To illustrate, they are meeting slowing demand and production challenges, and even market leader Tesla has cut prices to stoke order.
Despite Nikola’s difficulties, battery electric trucks created by the partnership with Ulm, Germany-based Iveco, are already used in the U.S., and orders are being taken in Europe. Next year, fuel-cell hydrogen trucks are anticipated to be on the road.
In a statement, Iveco stated that the announced purchase would have a one-time impact on its income statement for the first quarter of $48 million, which it anticipated to absorb through cash flow generation without affecting its cash flow forecast for this year.
According to the agreement, Nikola will focus its operations in North America. At the same time, Iveco will concentrate on Europe for the ongoing development and commercialization of its battery electric (BEV) and fuel cell (FCEV) electric trucks.
They noted that Iveco would continue to be a significant partner and a vital supplier to Nikola, and the two businesses will continue to share and develop specific standard technology.
Ultimately, Iveco’s total investment would consist of cash payments totaling $35 million and the return of 20 million shares of the American company to Nikola, which makes up a portion of the holding Iveco owns. After the transaction, Iveco will keep five million Nikola shares.
