Nikola Files for Chapter 11 Bankruptcy Protection
The electric vehicle manufacturer Nikola has announced its filing for Chapter 11 bankruptcy protection, as stated in a recent press release. Company executives disclosed that, as of October, Nikola has sufficient cash to sustain operations only until the first quarter of 2025.
Nikola has been under scrutiny since 2020 due to fraud allegations, which not only led to investigations but also resulted in the conviction of its founder.
CEO’s Statement
In a statement, CEO Steve Girsky attributed the company’s financial woes to “various market and macroeconomic factors.” He noted, “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.” Despite these efforts, Girsky remarked, “Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the board has determined that Chapter 11 represents the best possible path forward under the circumstances.”
This type of bankruptcy protection allows a company to reorganize while continuing operations and gradually paying off creditors. Nikola has also sought permission to sell its business and plans to keep its operations running throughout the bankruptcy process, with $47 million in cash available to fund activities.
Stock Performance
The company’s stock has plummeted from over $30 in early 2024 to approximately $0.70, a drop exceeding 95%. On Wednesday morning, shares were down nearly 60% in premarket trading, following a 28% plunge earlier this month after reports of the impending bankruptcy filing.
Financial Challenges
Nikola, which went public in June 2020, has a troubled past marked by financial and operational difficulties. During its third-quarter earnings call in October, Nikola reported a loss of nearly $200 million and indicated that its cash reserves would only support operations until the first quarter of 2025, while also exploring potential partnerships.
In the third quarter, the company reported shipping 90 trucks, a considerable increase from just three in the same period the previous year. At its peak in 2020, Nikola was valued at $34 billion, despite not generating any revenue.
Legal Troubles
In September 2020, investigations by the Securities and Exchange Commission and the Department of Justice were initiated after Hindenburg Research, a short-seller firm, accused Nikola of operating “an intricate fraud” under the leadership of founder Trevor Milton. Milton, who denied the allegations and labeled the report a “hit job for short sale profit,” resigned from his position as executive chair the same month.
In August 2023, Girsky, a former executive at General Motors, took over as CEO. Months later, Milton was sentenced to four years in prison for fraud and was ordered to pay almost $168 million to Nikola for making misleading public statements about the company.
Correction: February 19, 2025 — An earlier version of this story inaccurately reported the number of trucks shipped by Nikola in the third quarters of 2023 and 2024. The correct figures are three and 90, respectively, not 3,000 and 90,000.
