General Motors Signs New Agreement with Hydrogen Fuel Cell Truck Developer Nikola Corp, it Does Not Include Building the Badger Pickup
In September, U.S. automaker General Motors made headlines when its announced a $2 billion equity stake in fuel cell and electric vehicle startup Nikola Corporation. The deal included GM building Nikola's Badger pickup truck and access to Nikola's hydrogen fuel cell technology for the development of commercial vehicles. Now the automaker has entered into a new agreement that supersedes the original plans announced on Sept 8.
Nikola Corporation announced today the signing of a non-binding Memorandum of Understanding (MOU) with General Motors for a global supply agreement integrating GM's Hydrotec fuel-cell system into Nikola's commercial semi-trucks.
Under the terms of the MOU, Nikola and GM will work together to integrate GM's fuel-cell technology into Nikola's Class 7 and Class 8 zero-emission semi-trucks for the medium- and long-haul trucking sectors.
"We are excited to take this important step with GM, which provides an opportunity to leverage the resources, strengths and talent of both companies," said Mark Russell, Chief Executive Officer of Nikola. "Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market. We believe fuel-cells will become increasingly important to the semi-truck market, as they are more efficient than gas or diesel and are lightweight compared to batteries for long hauls. By working with GM, we are reinforcing our companies' shared commitment to a zero-emission future."
GM said its Hydrotec fuel cell system will be engineered at its Michigan technical facilities in Pontiac and Warren and manufactured at its Brownstown Charter Township battery assembly plant.
Nikola Corp said the MOU does not include GM's previously intended equity stake or manufacturing the Nikola Badger electric pickup truck. As a startup without a factory for mass production, the development of the Badger was dependent on securing an OEM partnership from a major automaker such as GM.
Nikola said it will refund all previously submitted order deposits for the Nikola Badger, which was revealed in February.
Under the new MOU, GM won't be building the Nikola Badger pickup as originally planned.
Nikola said it expects to begin testing prototypes of its hydrogen fuel-cell powered trucks by the end of 2021, with testing for the beta prototypes expected to begin in the first half of 2022.
As part of the agreement, Nikola will also utilize General Motors' Ultium battery system, representing a key commercialization opportunity for GM in the trucking industry.
"This supply agreement recognizes our leading fuel cell technology expertise and development," said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain. "Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future."
Nikola Corp last made headlines in September after its CEO Trevor Milton was forced out of the company amid allegations of massive fraud surrounding the development of its fuel cell technology. As a result, the original $2 billion investment announced on Sept 8 by GM was put on hold to reevaluate the terms. The Detroit automaker had until Dec 1 to back out or renegotiate its deal with Nikola.
Just a year ago, Nikola was viewed by many as having the potential to disrupt the trucking industry with its innovative hydrogen powered and battery electric trucks in the same way Tesla did when the Model S was introduced in 2012.
However Nikola's former CEO greatly exaggerated the capabilities of the company's hydrogen fuel cell technology. Nikola did not even have a working prototype. In addition, the company claimed that most of its core technology was developed in-house, but was actually assembled from parts manufactured by third party suppliers, including Bosch.
Nikola even produced a video called "Nikola One in Motion" which showed a truck seemingly cruising at highway speeds. But a former employee said that the video was staged. Nikola had the truck towed to the top of a hill on a remote stretch of highway and simply filmed it coasting downhill.
Last year at an unveiling event called "Nikola World 2019", the former CEO called the Nikola Two "the most advanced commercial truck the world has ever seen."
The company claimed its hydrogen-powered trucks produce up to 1,000 horsepower with 2,000 ft-lbs of torque and a range of 500 to 750 miles. The trucks are designed for long-haul freight operations.
Nikola said it received a flood of orders for its Nikola One and Nikola Two hydrogen-powered trucks. The company told Forbes last year that it secured $14 billion in commercial truck leases from Anheuser Busch and U.S. Express, each of which is a seven-year lease worth about $1 million.
The volume of orders Nikola received for the Nikola One and Two was so high that Nikola said it had to stop taking orders. "We're sold out for eight years of production," Milton told Forbes at the time.
The Nikola One fuel cell truck.
Hydrogen powered trucks which use a fuel cell to generate electricity to power the electric motors, are viewed as a more practical solution for long haul freight over battery-powered trucks. A Class-8 electric truck requires heavy and expensive lithium ion batteries in order to travel over 500 miles per charge. The batteries alone would add thousands of pounds of additional weight that otherwise might be used for cargo.
In addition, charging would take significantly more time than refilling with hydrogen, which takes around 20 minutes, according to Nikola.
In June, Nikola completed its previously announced reverse merger with special purpose acquisition company (SPAC) VectoIQ Acquisition Corp. As part of the reverse merger, Nikola became a public company trading on the NASDAQ under the ticker symbol "NKLA."
Shares of Nikola Corp tumbled as much as 50% in September after Milton announced he was stepping down from the company he founded and leaving its board. As of today, shares of Nikola are down roughly 75% since its IPO in June. The stock is down nearly 27% on Monday to $20.41. But the MOU with GM may help Nikola regain the trust of investors.
The agreement between Nikola and GM is still subject to negotiation and execution of definitive documentation acceptable to both parties, the companies said
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