The Founder & Former CEO of Fuel Cell Truck Startup Nikola Corp Indicted for Misleading Investors

The Founder & Former CEO of Fuel Cell Truck Startup Nikola Corp Indicted for Misleading Investors

Author: FutureCar Staff    

Trevor Milton, the founder of fuel cell truck startup Nikola Corp, has been indicted for deceiving investors and is facing criminal charges for making false and misleading statements, the U.S. Department of Justice said on Thursday.

The indictment said that, from November 2019 to September 2020, Milton defrauded investors into buying Nikola shares by making bold claims about company and technology and truck development as its sought an IPO.

Prosecutors in New York charged Milton with two counts of securities fraud and one count of wire fraud over his statements from Nov 2019 to Sept 2020 about Nikola's products and technology, Reuters reported.

Prosecutors said the 39-year-old CEO misled investors in order to drive up Nikola's stock price, become one of the world's 100 richest people, and "elevate" his stature as an entrepreneur.

"Milton lied about nearly every aspect of his business," U.S. Attorney Audrey Strauss in Manhattan said at a news conference.

Nikola Corp was once viewed by many as having the potential to disrupt the trucking industry with its innovative hydrogen-powered and battery-electric trucks, the same way Tesla did to the auto industry when the Model S was introduced in 2012.

Nikola went public in June 2020 in a high-profile reverse merger deal with special purpose acquisition company (SPAC) VectoIQ Acquisition Corp. New York-based VectoIQ is focused on startups developing technologies such as autonomous vehicles, smart mobility and electrification. 

The IPO valued Nikola Corp at roughly $20 billion as the stock more than doubled in the days after. However the company's success was short-lived.

Nikola's problems began two months later when well-known short seller Hindenburg Research published a scathing report in Sept 2020 just after a $2 billion equity investment from General Motors.

GM agreed to supply batteries, chassis architecture, fuel cell systems and factory for Nikola's Badger pickup, in exchange for an 11% stake in the company and $700 million.

Hindenburg said it had collected evidence to show Nikola and its CEO Trevor Milton made false claims about the company's proprietary hydrogen fuel cell technology in order to form partnerships with large automakers like GM.

Hindenburg said it gathered extensive evidence, which included recorded phone calls, text messages, private emails and behind-the-scenes photographs detailing dozens of false statements by Nikola founder Milton surrounding the company's fuel cell technology.

Hindenburg Research said it was short-selling Nikola stock and labelled the company as a "fraud", a charge that Nikola denied. 

"We have never seen this level of deception at a public company, especially of this size," the Hindenburg report warned potential investors last September.

Analysts also criticized GM after its $2 billion investment in Nikola for not doing the appropriate due diligence, although GM said it had thoroughly vetted the company.  

Among the evidence collected by Hinderburg was leaked photos of Nikola's fuel cell components, including a power inverter, which the company said were developed entirely in-house, with black tape hiding the interver's manufacturer, which was German supplier Bosch.

Milton resigned last September after the report was made public. 

Shares of Nikola Corp tumbled as much as 30% after Milton announced he was stepping down from the company he founded and leaving its board.

"While founder Trevor Milton's departure may give the appearance of a company that's moving on, we believe this is only the beginning of Nikola's unraveling," Hindenburg said in its own statement at the time. Hindenburg also asked GM to reevaluate its deal.

In February, Nikola disclosed, following a review by an outside law firm, that both it and Milton had made several statements that were "partially or completely inaccurate".


Nikola released a promotion video in 2018 for its fuel cell truck named the "Nikola One", in which it appeared to be traveling down the highway. The company boasted about the video on social media and called it "In Motion". In reality, the truck was simply rolling down hill as the truck's electric propulsion system was not engaged or even functional. 

After growing controversy about the video, which was widely shared on social media, Nikola finally admitted that the truck in the video did not have a working hydrogen fuel cell onboard. The company weakly defended the clip by saying it never claimed that the truck was "under its own propulsion" or "powertrain driven", although it appeared to be.

A former Nikola employee said that Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down as if its was under its own power.

Milton said that investors who invested during the period leading up to Nikola's high-profile IPO knew the actual technical capabilities of the Nikola One fuel cell truck at the time of their investment.

Now Milton will have to answer to the U.S. Justice Department, which will likely result in the biggest investigation of the company yet. Depending on how the case plays out, Nikola Corp's future is not looking as bright as it once was.

Nikola Corp shares, which trade on the Nasdaq, are down over 9%, falling to $12.88 Thursday morning on the new of Milton's indictment.

FutureCar Staff
FutureCar Staff
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