ONE WAY to try to emulate Tesla’s success is to name your firm after the same person. Nikola, founded in 2014 to make electric and hydrogen-powered lorries, is, like Elon Musk’s carmaker, named after Nikola Tesla, a Serbian-American pioneer of electricity. Nikola’s market value nudged $30bn after it went public in June. Some investors were puzzled that a firm not yet selling vehicles could be worth more than Ford, which sold 5.4m last year. Nikola’s share price fell back over the next two months. It jumped again on September 8th, after General Motors said it would take an 11% stake in the firm.

This time the euphoria was even more short-lived. On September 10th Hindenburg Research, an investment firm (named after the airship disaster from 1937) released a report calling Nikola an “intricate fraud” that had told an “ocean of lies”. Nikola’s shares shed 36% of their value over the next couple of days.

Among other things, Hindenburg alleges that Trevor Milton, Nikola’s boss, made misleading statements when he unveiled the Nikola One, a hydrogen-electric lorry. Mr Milton, Hindenburg said, suggested a demo vehicle was driveable when it was not. A Nikola One shown travelling along a road in a separate video, Hindenburg claimed, was in fact rolling down a hill unpowered. The investment firm also gave short shrift to Nikola’s claims of revolutionary hydrogen and battery technologies, and cast doubt on the expertise of Nikola’s staff.

Nikola described Hindenburg’s report as “a hit job…driven by greed”. It pointed out that Hindenburg had a short position in Nikola’s stock, so it stood to profit if the price of Nikola’s shares fell (as Hindenburg acknowledged in its report). On September 14th Nikola published a statement accusing Hindenburg of “false and defamatory” claims designed to “manipulate the market”. It also appeared to concede that the Nikola One unveiled by Mr Milton had not been driveable and confirmed that the vehicle in the video had indeed been unpowered. But the firm notes that a later model, the Nikola Two, has driven under its own power several times. It characterised itself as an “early-stage” company trying to “prove its concepts”.

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On September 11th Mr Milton tweeted a statement that Nikola “intends to bring the actions of the activist short-seller, together with evidence and documentation, to the attention of the US Securities and Exchange Commission”. On September 15th the Wall Street Journal reported that the Department of Justice had taken an interest in the case. General Motors says it is “fully confident in the value we will create by working together” with Nikola. Nikola itself says that all its other partners are sticking with it. Investors appear more jittery. Nikola’s share price is down 27% from the day before Hindenburg’s report.

This article appeared in the Business section of the print edition under the headline “Short circuit”

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