An electric truck-maker that sought to rival Elon Musk’s Tesla has filed for bankruptcy in the US after its founder was sent to prison for fraud.
Nikola, which developed hydrogen fuel and battery-powered trucks, was once valued at more than $30bn (£24bn), but its share price collapsed just months after it went public in 2020 amid claims it was misleading investors.
A short-seller report at the time accused its founder, Trevor Milton, of creating an “intricate fraud built on dozens of lies”.
Milton quit the business in 2021 and in December 2023 was sentenced to four years in prison and fined $1m for defrauding investors. In 2021, the company agreed to settle claims with US regulators for $125m without admitting wrongdoing.
On Wednesday, the company filed for bankruptcy protection with a court in Delaware. In filings, it said it had more than $1bn in liabilities. The company added it had around $47m of cash available and would be seeking a sale of its assets.
Steve Girsky, the Nikola chief executive, blamed a downturn in demand for electric vehicles for the company’s bankruptcy. He said: “Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate.
“In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges.”
Milton founded Nikola in 2014 with the promise to develop green trucks and was soon claiming the company received thousands of pre-orders worth billions of dollars. In 2016, he revealed what he claimed was a working prototype of the company’s Nikola One truck.
However, after the company went public in 2020, short-sellers at Hindenburg Research published a report alleging the company was an “intricate fraud built on dozens of lies”.
The report revealed that Nikola had faked a video showing its truck driving on a road in 2017. In fact, the video was created by towing the truck to the top of a hill and rolling it down the road.
Milton insisted in court that he “did not intend to harm anyone”. He asked for the judge to consider his “unusually tender heart” and argued he had not been a “very seasoned CEO” when building the company.
However, a jury found him guilty of fraud. Damian Williams, the US prosecutor, said: “Trevor Milton lied to investors again and again – on social media, on television, on podcasts, and in print.”
After Milton’s exit, the company has gone on to sell hundreds of hydrogen powered trucks. However, its latest financial results showed the company had lost $481m in the nine months to September 2024.
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