Nikola Motor Company Goes Public – Hydrogen Hype or Game Changer?
[June 8, 2020]
On June 4, 2020, Nikola Motor Company, the much-hyped Class 8 hydrogen truck maker, had its shares listed on the NASDAQ exchange, even before they’ve delivered a single truck to a commercial customer. The company’s founder, Trevor Milton, is certainly no shrinking violet, boasting on the day of the company’s initial public offering that Nikola’s vertically integrated business model was “similar to Amazon,” insinuating a similar future valuation to the retail giant. Milton also recently made headlines for refusing to return a $4.1 million Paycheck Protection Program loan, just after purchasing a $32 million, 2,600-acre ranch with a 16,800 square foot mansion in Utah. Milton justified the PPP loan in that “there’s a difference between having a high valuation and having cash."
Trevor Milton likens his company Nikola to that of Amazon.
The opening paragraph may make you think I already have my torch and pitchfork out for Milton and Nikola. Not at all. I wish Milton and his company the best in their endeavors. However, making comparisons to one of the wealthiest companies on earth on your first day as a public company, and refusing to return a loan intended for small businesses after making a rather indulgent personal purchase and a $3 billion corporate valuation makes for some interesting “optics” among the public and investment community. As did Nikola’s lawsuit against Tesla in 2018 for patent infringement for its side door design.
Although Nikola claims it has commitments for purchases of 800 trucks from brewing company Anheuser-Busch, and a total claimed pre-order commitment of $9 billion overall, it should be noted that on Nikola’s site itself, a pre-order is a no-money-down proposition. The link to the terms and conditions page is similarly non-committal, giving Nikola the discretion to decline customers’ pre-orders, although it would seem it would be in the company’s interest to fulfill as many pre-orders as possible. The $9 billion in pre-orders is essentially Monopoly money until the company starts to build and deliver trucks. Rather than stay laser-focused on development and delivery of its Class 8 hydrogen truck, Nikola has also since announced an all-electric shorter-range truck, an electric UTV, and an electric off-road pickup prototype, the Badger, that also utilizes hydrogen for a claimed combined 600 miles of range.
The Nikola Badger boasts 300 miles of EV range plus another 300 miles via hydrogen.
Of course, many of the early skeptics of Elon Musk and Tesla likewise cast doubt and threw shade on the boastful entrepreneur, famously shorting the stock, and proclaiming the upstart EV maker had no chance against the more than century-old automotive establishment. The way things have worked out for Tesla and Musk has certainly silenced most of the doubters as of late, although there are still a few vocal cynics, and plenty of EV skeptics remain.
Being an entrepreneur takes a certain personality, a thick skin, a lot of self-confidence, and a healthy dose of salesmanship. Milton certainly doesn’t seem to be lacking the last two. Nikola and Milton may ultimately surprise us all, and live up to its promise of the “Amazon of truck makers.”
(Images courtesy Nikola)
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