EV markets continue to grab the headlines this week as Tesla competitor Nikola (NASDAQ:NKLA) announced that it had teamed up with GM (NYSE:GM) to produce its much-hyped Badger pickup truck.

The deal with GM could be an absolute gamechanger for the up-and-coming car maker, as it looks to take on Tesla’s cybertruck. Nikola will not just gain access to GMs decades of engineering, car-making experience, and validated parts, it will also use General Motors’ latest Ultium battery technology and a multi-billion-dollar fuel cell program.

In a statement to the press, Nikola founder and CEO Trevor Milton said: “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’’.

So what does GM get out of this deal?

First of all, General Motors takes an interest of 11 percent in the carmaker that went public in June of this year. 

Nikola will exchange some $2 billion in newly-issued common stock for the abovementioned services and access to GM’s technology, and GM will also get to nominate one director to Nikola’s board.

While most eyes are on Nikola’s badger truck, GM will also supply the company with fuel cells for its Class 7 and Class 8 semi-trucks. Newcomer Nikola is betting heavily on hydrogen technology, while most of its major competitors in the truck-making industry such as Daimler, Freightliner, Tesla, and Volvo are looking to develop all-electric trucks.

Currently, the network of hydrogen filling stations in the U.S. and Europe is very limited, leading to lackluster interest from automakers to actually start building fuel cell powered vehicles, but things could be about to change.

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Bosch, the world’s biggest auto parts maker already announced in April that it would work with Swedish Powercell AB to develop key components for hydrogen fuel cells for personal vehicles.

Next to that, governments are warming up to the benefits of hydrogen-powered vehicles and trucks.

The EU, the U.S., and several East-Asian countries have presented ambitious plans to stimulate the development of a so-called ‘hydrogen economy’, aiming to increase the number of hydrogen filling stations for both commercial vehicles and passenger vehicles.

Nikola aims to roll out its class 8 fuel-cell/electric semi-truck in 2023, while the Badger pickup truck should go in production in 2022.

The deal sparked direct enthusiasm among shareholders of both companies. Nikola shares were up 37 percent at 11:10 AM ET, and GM saw its share price rise by nearly 8 percent. Competitor Tesla on the contrary saw its share price plunge 14 percent on news that the EV maker failed to make it into the S&P 500 index.

By Tom Kool of Oilprice.com

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