Nikola files for Chapter 11 bankruptcy protection, seeks quick asset sale
The long-troubled Nikola Corporation filed for Chapter 11 bankruptcy protection on Wednesday. News from company leaders had largely been quiet the past few months, leading some to believe such a move was coming. CEO Steve Girsky said Nikola had faced certain “market and macroeconomic” factors that impacted its ability to operate.
“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. Unfortunately, our very best efforts have not been enough to overcome these significant challenges,” he said, continuing to add that Nikola’s executive team decided Chapter 11 was the “best possible” path.
The company has faced several recent financial struggles, starting with the 2023 recall of 209 battery-electric trucks due to a fire hazard posed by the vehicles’ battery packs. The setback was evident in the company's financials for the year, which saw its net losses jump 20% to $988 million for 2023.
All 209 trucks were to be retrofitted and returned to customers by the end of 2024, but as of this February, Nikola has only returned 94 trucks. The recall has cost Nikola $44 million so far, but Girsky said the total impact will be approximately $56 million.
After the battery fires, Nikola switched focus to its hydrogen fuel cell trucks, a capital-intensive endeavor that required building refueling stations and upping production. According to a filing, Nikola’s inventory now consists of 259 trucks, 156 of which are BEVs. The company also has 87 trucks (79 FCEV and 8 BEV) at dealer locations, some of which are already promised to customers.
See also: Can hydrogen actually work for trucking operations?
Speaking of Nikola customers, the company said it intends to continue certain “directly provided” services and support operations, such as its Hyla fueling business, through the end of March for trucks already in the field. After that, though, the company said Nikola’s partners will need to support those activities. There are currently eight Hyla fueling stations, four of which are in California, and one each in Arizona, Illinois, Colorado, and Canada.
Current Nikola truck owner Bill Hall of Coyote Container called the bankruptcy a “sad day” for the zero-emission movement. Last year, Hall received the first Nikola Tre FCEV production model sold in California. In June 2024, he discussed with Fleet Maintenance some of the ups and downs he experienced in his first six months of ownership.
On the day Nikola announced its bankruptcy, Hall shared optimistic thoughts for the future.
“There was a strong backbone formed out of the Nikola product line and early adopters […] With good fortune, Nikola will rise from the ashes like a phoenix and return to serving a market that was just in its infancy. Chapter 11 is a reorganization process. I was out in my Nikola truck yesterday and will jump behind the wheel again today,” he said in a statement to Fleet Maintenance.
Nikola is entering bankruptcy proceedings with $47 million in cash, less than a quarter of the $197 million it had at the end of Q3 2024. Its leaders are seeking a relatively fast sale of its assets.
“Speed and certainty are critical because [Nikola] simply [does] not have sufficient liquidity to support a protracted sale process,” Girsky said in a filing.
Last month, fellow electric truck producer Mullen Automotive purchased Nikola’s battery line equipment for an undisclosed amount. Under Nikola’s proposed accelerated bankruptcy timeline, the asset sale will conclude on April 11.
Shares of Nikola (Ticker: NKLA) have been on a steady decline over the past six months, tumbling 95% from a high of $7.68 per share in September to $0.46 per share as of writing.
