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General Motors Takes $2 Billion Equity Stake in Nikola Motor Co., Will Build its Electric/Fuel Cell Badger Pickup

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【Summary】Electric truck startup and Tesla rival Nikola Motor Company has signed a strategic partnership with U.S. automaker General Motors to build its Badger electric and fuel cell pickup truck. The Nikola Badger is the world's first truck with a hydrogen fuel cell or battery-power option.

Eric Walz    Sep 08, 2020 12:15 PM PT
General Motors Takes $2 Billion Equity Stake in Nikola Motor Co., Will Build its Electric/Fuel Cell Badger Pickup
The Nikola Badger pickup.

Electric truck startup and Tesla rival Nikola Motor Company has signed a strategic partnership with U.S. automaker General Motors to build its Badger electric and fuel cell pickup truck. The Nikola Badger is the world's first truck with a hydrogen fuel cell or battery-power option.

Nikola's Badger pickup, which was first revealed in February, is a high-performance truck that's poised to compete with popular gas-powered trucks, such as the best-selling Ford F-150, Dodge Ram, Jeep Gladiator and Tesla's upcoming Cybertruck.

As part of the deal, GM will receive a $2 billion equity stake in Nikola in exchange for its contributions to the Badger pickup. GM will use its expertise in volume vehicle manufacturing to engineer, validate and build the electric and fuel cell version of the Badger.

Nikola, founded in 2015, is among a new crop of electric truck makers, including Amazon-backed Rivian, Bollinger Motors and Lordstown Motors that are targeting the truck segment with more powerful electric trucks for both the consumer and commercial markets. The Badger pickup is intended to be a strong competitor in the truck segment currently dominated by GM, Ford and Dodge.

"Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn't dream of a better partnership than this," said Nikola Founder and Executive Chairman Trevor Milton.

Nikola will remain an independent company and be responsible for the sales and marketing for the Badger. The company will also retain the Nikola Badger brand.

The agreement gives Nikola a big boost, since the young startup has limited experience in engineering and the volume production of electric vehicles. Nikola anticipates saving over $4 billion in battery and powertrain costs over 10 years and over $1 billion in engineering and validation costs by working with GM on vehicle development.

As part of the agreement, Nikola will use General Motors' new Ultium battery system and Hydrotec fuel cell technology. GM unveiled its Ultium battery system for the first time in March.

In addition to its Badger pickup, Phoenix-based Nikola Motor is developing a line of Class-8, hydrogen-powered electric semi trucks for the commercial market. GM will also integrate its Ultium battery technology in Nikola's big trucks, which are dubbed the Nikola One and Nikola Two and Nikola Tre.

Working with Nikola will also give GM a foothold in electric commercial truck space, which is a key milestone for General Motors as it looks towards building more electric vehicles. Hydrogen fuel cell powered trucks show promise for the industry since they are more efficient than gas or diesel-powered vehicles.

"This strategic partnership with Nikola, an industry leading disrupter, continues the broader deployment of General Motors' all-new Ultium battery and Hydrotec fuel cell systems," said General Motors Chairman and CEO Mary Barra. "We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability. In addition, applying General Motors' electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future."

nikolabadger07.jpg

A rendering of the Badger's interior.

Nikola's fuel cell and electric powered semi trucks offer shipping companies a zero-emissions alternative to diesel powered trucks and major carriers are lining up to place their orders. 

Nikola's CEO Milton 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 roughly $1 million. The volume of orders Nikola received for the Nikola One and Two were so high that Nikola said it had to stop taking orders. "We're sold out for eight years of production," Milton told Forbes.

In June, Nikola Motor completed its previously announced reverse merger with VectoIQ Acquisition Corp. The deal was approved on June 2. As part of the reverse merger, Nikola Motor is now a publicly traded company. Shares of the new company are trading on the Nasdaq under the ticker symbol "NKLA." 

After the partnership with GM was announced today, Nikola's stock soared by 48%, pushing its stock over $50 a share. The electric truck startup's market cap is nearly $20 billion.

GM's investment in Nikola Motor is subject to customary antitrust regulatory approval and closing conditions. The parties anticipate closing the transaction prior to Sept. 30, 2020.

The Badger pickup will make its public debut Dec. 3-5, at Nikola World 2020 in Arizona. Production is expected to start in late 2022 at a location to be announced at a later date. 

The strategic partnership with Nikola is the second big announcement from GM in less than a week as it looks to ramp up its electrification plans. Last week, GM announced a partnership with Japan's Honda Motor Co to jointly develop new electric models for the North American market.

GM's chief U.S. rival Ford is also developing a battery powered version of the F-150, which has been the best-selling pickup in the U.S. for over 40 consecutive years. Whether the electric F-150 will be as innovative as the GM-built Nikola Badger is still unclear.

The initial specs revealed earlier this year by Nikola Motor for the fully-electric version of the Badger are impressive. The Badger can go from 0-60 mph in 2.9 seconds, with peak horsepower of 906 and peak torque of up to 980 ft lbs. The electric truck also has a towing capacity of up to 8,000 lbs.

In February when the Badger was revealed, Nikola Motor CEO Trevor Milton tweeted that electric pickup "is designed to take down the Ford Raptor", which is Ford's high-performance, off-road version of the F-150.

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