GM to Build Nikola Badger – What Does Nikola Actually Do?
[Sept. 9, 2020]
On Sept. 8, 2020, Nikola and General Motors announced a “strategic partnership” in which GM would “engineer, validate, homologate and build the Nikola Badger for both the battery electric vehicle and fuel cell electric vehicle variants as part of the in-kind services.” That seems like a lot of work on GM’s part, and not a whole lot on Nikola’s part. Of course, it wasn’t a complete free lunch for Nikola, with GM getting a sizeable 11 percent equity stake in Nikola, “in exchange for certain in-kind contributions.” At Nikola’s current market value, that’s approximately $2 billion worth.
Those of you that have followed my posts here on The Watt Car know that I’m an avowed skeptic of Nikola and its boastful, free-wheeling founder and chairman Trevor Milton. From everything that I’ve observed, Milton has been the beneficiary of a “perfect storm” of circumstances, in which he’s been able to get ample news coverage, get the attention of much larger players, and ride the coattails of the trend of electrification, arguably led by Tesla, GM, and Volkswagen, among others.
Nikola has received tentative commitments from Iveco, GM, and Class-8 “glider” manufacturer Fitzgerald for its Nikola One Class-8 hydrogen truck. The company purchased just under 400 acres in Coolidge, Ariz., (outside of Phoenix) in March 2019 as the ostensible future production site of the Nikola One. The company held a “groundbreaking” ceremony in July 2020, and promised the plant would build the One, Two, and Tre, with a total annual production capacity of 35,000 units a year.
Nikola recently broke ground on its Coolidge, Ariz., manufacturing facility. But considering the company’s partnerships, will Nikola actually produce vehicles there?
But based on Milton’s and Nikola management’s evidently “asset-light” approach to doing business, will the Arizona factory ever actually build anything? Or will Nikola announce a partnership with PACCAR, Daimler Trucks, or some other partner to also contract manufacture their heavy trucks, as they did with the Badger?
What I find interesting is how much scrutiny and criticism Tesla co-founder and CEO Elon Musk receives whenever any projects or initiatives are behind schedule, or somehow fail to meet Musk’s lofty promises. Yet for the most part, Nikola and Milton seem to get a free pass on all of their claims and promises, which have been substantial.
Let’s examine the history and track record of both men. In the last 25 years, Elon Musk has been a co-founder of S&P 500 component PayPal, founded Space X, and was co-founder of Tesla. He holds a Bachelor’s in Economics and Physics from the University of Pennsylvania. He was accepted into Stanford’s Energy Physics/Materials Science PhD program, but decided to pursue other interests.
Milton attended one semester at Utah Valley State College. The self-described “serial entrepreneur” initially started as an ADT security systems authorized dealer/installer. Later, he started dHybrid systems, a company that developed diesel/natural gas dual fuel systems. Ultimately purchased by Worthington Industries, of propane cylinder and “BernzoMatic” torch fame, Milton claims intellectual property theft with former partners. He also founded Upillar.com, a kind of quasi-Craigslist self-serve online classifieds site. The site is still ostensibly live, but has a bunch of dead pages. Milton’s intellectual claim to fame is that he’s fluent in Portuguese from his stint as an LDS missionary in Brazil. I’ll give him credit for that. I can’t speak Portuguese, and I wouldn’t exactly call my Spanish “fluent” despite my surname.
I am far from one to denigrate the earnest efforts of entrepreneurs genuinely looking to make a better product or solve a pressing problem. And a college degree is far from a requirement for success in business. Milton, a nominal billionaire, joins the likes of Steve Jobs, Larry Ellison, Michael Dell, Bill Gates, and Richard Branson as billionaires without a four-year degree.
However, everything I’ve seen and read so far about Milton and his background points to someone more interested in self-aggrandizement and self-enrichment than genuine breakthroughs. I may ultimately be forced to eat a generous portion of crow as Nikola and Milton go on to revolutionize the hydrogen-powered transportation sector. However, it’s been decades that much bigger, deeper-pocketed companies have attempted and failed to break hydrogen into the mainstream. Color me a little skeptical that Nikola will be the company to do it this time around.
(Images courtesy Nikola)
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