Electric heavy truck maker Nikola announced on Monday that it had reached a $144 million agreement to buy EV battery pack supplier Romeo Power, giving the business control over a vital link in its supply chain. 

California-based Romeo Power focuses on creating battery modules and packs for large electric commercial vehicles, with lithium-ion battery cells from other battery cell-producing companies. So far, Nikola has been Romeo’s largest customer. In 2022, Nikola hopes to ship between 300 to 500 electric vehicles. 

Romeo will receive $35 million in interim funding from Nikola as part of the agreement so that it can carry on with business as usual until the acquisition is complete, according to the firms. According to Nikola, the purchase might result in savings of up to $350 million over the following four years.

Nikola CEO Mark Russell is excited about the acquisition and commented “Given our strong relationship with Romeo and ongoing collaboration, we are confident in our ability to successfully integrate and deliver the many expected strategic and financial benefits of this acquisition.”

Romeo Power in late 2022 went public with a SPAC merger.

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