Hydrogen electric trucking startup Nikola Corp. filed for Chapter 11 bankruptcy protection on Wednesday after unsuccessful attempts to secure a buyer or obtain additional funding to continue its operations.
Nikola, once celebrated in Silicon Valley and valued at $30 billion in June 2020 after going public through a special purpose acquisition merger, faced a decline following several scandals linked to its founder and former CEO, Trevor Milton.
Nikola now intends to auction its assets, subject to court approval, as stated in a regulatory filing. In a statement, Steve Girsky, president and CEO of Nikola, attributed the company’s challenges to various market and macroeconomic factors affecting the electric vehicle industry. He noted that despite efforts to raise capital, reduce liabilities, clean up the balance sheet, and conserve cash, these measures were inadequate to address the challenges, leading the Board to decide that Chapter 11 was the most viable option for the company and its stakeholders.
The company holds approximately $47 million in cash to finance its bankruptcy process. The proposed bidding process would allow interested parties to make binding offers for Nikola’s assets, separate from its debts or liabilities.
Nikola’s assets include Class 8 hydrogen fuel cell electric trucks and battery electric truck platforms. The company was also working on developing a HYLA hydrogen refueling highway in California.
Nikola’s bankruptcy filing marks the culmination of a prolonged decline. Initially seen as a successful SPAC, Nikola had secured a multi-billion dollar deal with General Motors until Milton faced fraud allegations for overstating the company’s electric truck technology.
Prosecutors in Milton’s case alleged he misled investors since 2019 by claiming Nikola built a truck from scratch and developed batteries that were actually outsourced. An infamous marketing video further damaged Nikola’s reputation, as it depicted a truck moving under its own power, when it was actually rolling downhill.
After the release of that video, a report from short-seller Hindenburg Research labeled the company a fraud, prompting Milton’s resignation in September 2020. He was later convicted of wire and securities fraud in 2022 and is currently appealing his four-year prison sentence while out on bail.
Nikola eventually settled with the U.S. Securities and Exchange Commission, agreeing to a $125 million penalty. This, along with the collapse of its stock, resulted in significant losses for both investors and the company.
Since then, Nikola has been endeavoring to raise the capital needed to maintain operations. In December 2024, the company attempted to raise $100 million through a common stock sale to repay debts and raise equity, following warnings during its third-quarter earnings call that it only had adequate funds to operate until Q1 2025. Nikola reported having $198 million in cash at the close of the third quarter.
