Steve Girsky, a Nikola board member and a key player in its $2bn deal with General Motors, on Thursday said that “an army” conducted due diligence on the electric truckmaker.
Speaking at a Financial Times Due Diligence Forum on special-purpose acquisition companies, or Spacs, Mr Girsky defended the company following fraud allegations levelled by a short seller last week. Both the Securities and Exchange Commission and the Department of Justice are examining the company.
Additionally, the FT has reported that Nikola’s proprietary technology is less developed than founder Trevor Milton has said at company events and in interviews.
Mr Girsky, managing partner at the advisory company VectoIQ, said its research was done before helping Nikola list publicly via a combination with a Spac it created.
“Personally, I’ve driven those trucks four times,” he said. “I’ve driven on electricity. I’ve driven on hydrogen. I think they’re awesome trucks.”
Nikola’s shares have tumbled since Hindenburg Research published a report last week calling it an “intricate fraud”, claiming the company faked a video and passed off purchased technology as its own. The company said the report contained false and misleading statements.
Defenders of Nikola have said it was more focused on building a network of hydrogen stations than building trucks.
GM inked a deal last week to take an 11 per cent equity stake in Nikola, under which it will engineer and manufacture the start-up’s Badger pick-up truck. Mr Girsky was previously vice-chairman at GM, and he made the introduction between Nikola and the Detroit carmaker.
The deal, scheduled to close at the end of the month, makes Nikola a customer for GM’s Ultium batteries and Hydrotec fuel cell technology while also giving the carmaker entrée into the heavy truck market.
Nikola’s value soared following its initial listing in June, at one point rising above Ford’s market cap. Mr Girsky said he could not comment on whether Spacs had led to overvaluations of companies.
The financial structure allows a company to list on a public exchange through a reverse merger, bypassing the expense and scrutiny associated with an initial public offering.
“We thought [Nikola] was a big idea,” he said. “To make these things work, capital is going to be required.”
Nikola’s shares have dropped more than 20 per cent in the past week to $34.