General Motors is taking a $2bn equity stake in Arizona-based electric and hydrogen vehicle maker Nikola, with plans to supply it with batteries and build one of its trucks.
The Detroit carmaker will engineer and contract manufacture the Badger truck for Nikola. It will also allow Nikola to access its parts and components.
Nikola plans to issue $2bn in new shares for the deal. The start-up has a market capitalisation of more than $13bn, although it has yet to make or sell a vehicle.
The move marks an expansion of the sale of GM’s Ultium batteries and Hydrotec fuel cell systems. Honda, with which GM has partnered for years, has been the most notable buyer so far of GM’s batteries.
“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 GM chief executive Mary Barra. “We are growing our presence in multiple high-volume [electric vehicle] segments while building scale to lower battery and fuel cell costs and increase profitability.”
Nikola said the deal will save the company $4bn in battery and power-train costs over the next decade, and $1bn in costs for engineering and validating vehicle components.
“Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready [electric vehicle] propulsion, world-class engineering and investor confidence,” said Nikola founder and executive chairman Trevor Milton. “Most importantly, General Motors has a vested interest to see Nikola succeed.”
GM said that besides the shares, it will receive another $2bn in benefits from contracts to manufacture the Badger and supply the batteries and fuel cells, as well as electric vehicle credits that will be retained over the life of the contract.
The deal extends the use of GM’s fuel cell technology to the heavy-duty commercial truck market and represents “a high-volume commercialisation” of the Hydrotec fuel cell system, GM said.
Although it will not engineer or manufacture the Badger, Nikola will still market it. The Badger, announced in February, will be publicly unveiled in early December. The truck will go into production in late 2022 at a location that the companies will announce later.
The deal eventually will cover other Nikola vehicles, including the Tre, One, Two and NZT.
Nikola shares were up almost 30 per cent at the start of trading on Tuesday, and GM shares rose more than 5 per cent.