Enlarge /. A Nel / Nikola tank pump can be seen in a 2019 promotional photo.
Nikola Motor Company
Hydrogen truck startup Nikola shares fell 26 percent on Wednesday after the Wall Street Journal reported the company was struggling to find partners to build a planned network of hydrogen fueling stations. Nikolas stock closed at $ 21.15 on Wednesday, down 57 percent from a high of $ 50 on September 8, the day Nikola announced that GM would design and manufacture its Badger pickup .
Shortly after the GM deal was announced, short seller Hindenburg Research announced that Nikola founder Trevor Milton was telling the truth at a 2016 event when he claimed the Nikola One truck was "fully functional" on stage. Nikola now admits that the truck never worked and that a promotional video of the truck was made by rolling it down a hill.
Nikola argued that this was old news as Nikola is no longer marketing the Nikola One and has a working prototype of the Nikola Two. But the revelations left the company in chaos, forcing Milton to resign on Sunday.
Why Nikola needs hydrogen filling stations
According to the Wall Street Journal, the Hindenburg revelations made it difficult for Nikolas to find help building a planned network of hydrogen filling stations. The company has already signed a contract to use Nel electrolysers to produce hydrogen and has been in talks with several companies – including BP and other energy producers, "industrial gas companies" and "truck stop operators" – to clarify the logistical details regulate help in setting up and operating the stations According to the Journal, "Nikola executives felt they were making progress in the signing of a contract," but "the conclusion of that contract has been put on hold after the Hindenburg Report". The journal admits that "a deal may yet be reached".
These gas stations are an integral part of Nikola’s business strategy. Instead of selling tractor units directly, Nikola plans to lease them for a fixed mileage price that covers fuel and maintenance. This reduces the risk of customers having to adopt unproven technology. However, the plan won't work if Nikola doesn't have any gas stations up and running by the time his hydrogen-powered semi rolls off the production line – something currently slated for 2023.
Nikola has long sought partnerships with companies that already have the technology Nikola needs. Nikola took that approach to the extreme in the GM deal; GM is to design and manufacture Nikolas Badger trucks based on GM's battery and hydrogen cell technologies. Nikola has similar contracts with other companies – including Iveco and Bosch – to help design or build its tractor units.
In short, a big part of Nikola's strategy so far has been to solve problems by throwing money at them. Until recently, the Nikola hype made it easy to raise money.
But the company could now enter an era of increasing investor skepticism. That could force Nikola to tighten his belt and do more with less. In this case we will find out if Nikola can achieve his ambitious goals without being so dependent on well-compensated partners.