Electric vehicle brand Nikola has announced plans to raise $100 million in cash as it looks to increase production of its battery-powered semis.
Initially, the automaker will offer $100 million in stock to public traders on the secondary market. Citigroup is set to underwrite the offering, and can choose to buy another $15 million in shares. Should the secondary offer fail to generate the targeted amount, an Nikola has already made an arrangement with an anonymous investor, who will purchase the remaining stocks. In 2020, the brand’s initial public trading offer was $12 billion. Shortly after announcing this financial strategy, the company’s share price fell to an all time low of 17.8%.
The money will nearly double the company’s current unrestricted cash, which sat at $123 million as of Tuesday. Nikola lost considerable amounts of money throughout last year, spending $221.1 million in Q4 alone. Since making the first deliveries of its Tre BEV class 8 semi in 2021, the automaker has struggled to meet both its production and sales targets. Last year, it manufactured 258 units and sold 131. For 2023, the brand hopes to deliver between 250 to 350 electric trucks. When it launches the fuel cell version of the semis later in the year, the company expects to sell 125 to 150 units.
Although other EV brands are trading slightly higher in early 2023 after losing considerable value over the course of last year, many share the same demand and production challenges facing Nikola. However, while electric cars are already a niche product, little demand currently exists for battery-powered semis, despite the technology’s significance. With little chance to turn a profit for the next several years, the brand will be forced to balance investor confidence with its relatively small budget until its customer base grows to a sustainable size. Last year, the automaker said it could seek to raise as much as $400 million from selling shares to ensure its annual targets are met.