JPMorgan ‘skeptical’ about GM producing Nikola badger pickup

Nikola Motor Company

Source: Nikola Motor Company

JPMorgan is “skeptical” about Nikola finalizing a cope with General Motors to provide an electrical pickup truck known as the Badger for the embattled car start-up.

Instead, JPM analyst Paul Coster expects the 2 corporations to renegotiate a previously introduced $2 billion deal with out the Badger, specializing in GM supplying Nikola with battery and gasoline cell applied sciences for its giant business vans – the cornerstone of its operations.

“(Nikola’s) CEO has been consistently non-committal regarding the Badger initiative, in our view, and we are skeptical that it will proceed given that it is not a strategic initiative for Nikola and it could drain the company of cash needed for the Class 8 truck initiatives,” Coster stated in an investor word Wednesday.

During an interview Tuesday on CNBC’s “Mad Money with Jim Cramer,” Nikola CEO Mark Russell stated negotiations with GM have been ongoing. He stated the corporate stays “interested” within the automaker’s applied sciences, however reiterated that Nikola won’t promote the Badger – a shopper car in contrast with semitrucks – with no companion to provide it.

“It has to have a business case,” Russell stated. “It’s got to be able to be something that makes sense for our shareholders. And we’ve got to have a partner. It isn’t in our core plan. If you look at our core plan, that’s about heavy truck and hydrogen … which is why we said from the beginning it takes a partner. So, we have a partner, it’s in play. If we don’t have a partner, it’s not.”

A GM spokesman declined to touch upon the negotiations Wednesday aside from the “transaction has not closed, and there is no new information” to report.

Coster stated JPM has a “sense that both GM and Nikola have reason to renegotiate the deal; Nikola may want to drop the Badger partnership, GM may want more stock to compensate for the diminished scope.” If not finalized by Dec. 3, both facet can walkway type the pact.

Shares of Nikola have been down as a lot as 17.4% throughout buying and selling Wednesday morning. As of about midday, that they had barely rebounded to $30.65 per share, down 11.2%.

The Sept. Three deal was initially seen as a no-lose scenario for GM. The partnership would give the Detroit automaker an 11% stake within the firm for supplying Nikola with battery and gasoline cell applied sciences in addition to producing the Badger pickup.

Two days after the announcement, quick vendor Hindenburg Research launched a damning report accusing founder and ex-Chairman Trevor Milton of creating false statements about the corporate’s know-how to draw traders and partnerships with different automakers. It characterised Nikola as an “intricate fraud built on dozens of lies” by Milton, who dismissed most of the claims earlier than resigning in September.

The allegations within the report have led to inquiries by the Department of Justice and Securities and Exchange Commission.

— CNBC’s Michael Bloom contributed to this report.

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