Dive Brief:

• Electric vehicle startup Nikola filed for Chapter 11 bankruptcy protection Wednesday, capping a winding years-long saga for the beleaguered company, according to filings in a Delaware bankruptcy court. The move follows CFO Tom Okray’s warning in October that Nikola only had enough cash on hand to meet the business’ obligations into, but not beyond, Q1 of this year, according to a transcript of the company’s Q3 earnings call. Nikola ended Q3 with about $198 million in cash reserves. 
• The maker of hydrogen-powered trucks undertook numerous efforts to bolster its liquidity and reduce its liabilities, such as a December sale of $100 million in shares. Nikola also conducted layoffs and imposed an inventory purchase moratorium, according to the first-day declaration of bankruptcy by CEO Stephen Girsky. “Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the company and its stakeholders,” Girsky said in a Wednesday press release.
• The Phoenix, Arizona-based company is entering the Chapter 11 process with $47 million in cash on hand to facilitate the process, and plans to market and sell “all, substantially all, or a portion of its assets and effectuate an orderly wind down of its businesses,” according to the release.

Dive Insight:

Nikola is the latest EV company to declare bankruptcy as the industry deals with changing regulations and slumping demand: EV firms including Arrival and Northvolt filed for bankruptcy in 2024, while shares of other industry players including Rivian and Lucid have slumped, The Wall Street Journal reported in November.

Concerns over the potential impact of President Donald Trump’s tariffs on the space have exacerbated financial worries by EV makers, including Tesla — with CFO Vaibhav Taneja warning such tariffs would affect the Elon Musk-led firm’s profitability, CFO Dive previously reported.

Among other industry headwinds, a shortage of available EV infrastructure and other supply chain challenges also played a role in Nikola’s decision to file for bankruptcy, Girsky said Wednesday.

“The hydrogen fuel cell vehicle market and hydrogen infrastructure are early-stage markets. As a result, the Company has experienced production shortages because of new technology supply chain challenges,” Girsky wrote. “Additionally, the lack of hydrogen infrastructure or supply for end users hampers truck sales and building out hydrogen infrastructure will require significant investment.”

Nikola’s bankruptcy represents the latest turn in what has been a bumpy road for the electric truck maker, which has faced numerous significant financial, economic and reputational challenges since its founding in 2015. The company’s shrinking cash reserves and lukewarm sales have led to a continuing slump in its stock price, with the EV maker considering numerous ways to boost its capital this year, including a potential sale, Bloomberg reported in January.

Founded in 2015, Nikola stole the EV spotlight in its early days after going public before selling a single truck in 2020. Its merger with blank check company VectoIQ in March of that year created a public entity valued at $3.3 billion, before the truck maker’s valuation skyrocketed to a peak of $28.8 billion, according to reports.  

However, a series of high-profile stumbles and roadblocks saw the company’s valuation swiftly plummet over the next four years — careening to a present market capitalization of $64.6 million, according to data from Nasdaq.

Shortly after its 2020 public debut, now-defunct short seller Hindenburg Research published a report that September claiming Nikola was “an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton’s career.” Milton, who left the company in June of 2020, was charged with securities fraud for misleading investors about Nikola’s zero emissions technology, before being convicted on counts of securities and wire fraud the following year.

As well as suffering those reputational dings, Nikola also struggled to fulfill both its financial needs and to deliver on the innovative technology it promised — suffering setbacks including a 2023 recall of its trucks after a flaw was discovered in its battery packs.

The company has continued to field losses from the recall, which are expected to reach $56 million in total, Girsky said Wednesday. Further compounding the company’s financial struggles is ongoing litigation with the Securities and Exchange Commission related to “a short seller article published in September 2020,” where the company agreed to pay $125 million in civil penalties, he said.  

Nikola declined to comment beyond its press release.