Nikola partners with GM to produce electric pickup

Source: CNBC

Since the unveiling of the concept in February, The Nikola Badger has been hyped to be the direct rival to Tesla’s Cybertruck. The one question slowing the Arizona startup was who would produce the electric pickup. That question was answered Tuesday when the company announced a partnership with General Motors. GM announced that it would take an 11% stake in the electric truck maker and produce the Badger by the end of 2022.

Benefits for GM

The $2 billion stake GM is getting will grant them the right to nominate one board member to Nikola in exchange for in-kind services. GM’s stake in Nikola is a big step for the automaker after receiving countless pressure from Wall Street to spin off its electric-vehicle segment. 

“This strategic partnership with Nikola, an industry-leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems,” said General Motors Chairman and CEO Mary Barra in a press release. “We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability. In addition, applying General Motors’ electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future.”

Related: GM Facing Market Pressure for EV Spin-Off

Benefits for Nikola

Nikola said that it anticipates saving over $4 billion in battery and powertrain costs over 10 years and over $1 billion in engineering and validation costs. Nikola Badger

“Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn’t dream of a better partnership than this,” said Nikola Founder and Executive Chairman Trevor Milton. “By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering, and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed. We made three promises to our stakeholders and have now fulfilled two out of three promises ahead of schedule. What an exciting announcement.”

Outlook for the future

Following the announcement, Nikola soared more than 48 percent to $52.94 according to Reuters. The investment brings a $500 million paper gain for GM and it expects a total of $4 billion in value from the deal including $700 million for building the Badger. 

GM’s partnership with Nikola is the second major alliance for the automaker in a week’s time. Last week, GM announced a North American Alliance with Honda Motor Co.

The announcement comes as GM prepares to unveil its first electric pickup, the GMC Hummer, in late 2021. The automaker will build both electric and fuel cell versions of the Nikola Badger truck. The Badger has been claimed to have a range of 600 miles, compared with the claimed 500-mile range of the Tesla Cybertruck.

Nikola remains an independent company, retaining the Nikola Badger brand and responsibility for sales and marketing for the truck. The production partnership comes at the right time for the EV truck maker as many direct competitors such as Tesla, Rivian, Lordstown, and Ford all have electric pickups set to roll onto lots in the near future.

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