Nikola, the U.S. electric truck maker, saw its market value drop by more than a quarter on Friday after naming its fourth CEO in four years and expressing doubts about its future as a going concern. The news comes as Nikola continues to face challenges with its supply chain and transitions to hydrogen fuel-cell technology.
Shareholders approved a plan to issue more stock in an effort to raise much-needed cash, despite concerns about dilution. Chairman Stephen Girsky, a former executive from General Motors, will immediately take over as CEO from Michael Lohscheller, who is stepping down due to a family health matter.
Nikola’s need for additional capital has led to doubts about its ability to continue operating for the next year, marking the third time since February that the company has voiced such concerns. Although it requires $600 million to execute its business plan, Girsky assured reporters that the capital raise will not be entirely dilutive equity capital.
Prior to the decline, Nikola’s stock had surged nearly 60% this year. However, the company’s shares were negatively impacted by a downbeat revenue forecast for the current quarter. Nikola has decided to focus on producing battery electric trucks only by order and to prioritize hydrogen fuel cell trucks.
The company has faced setbacks in recent months, including laying off 270 employees in June and liquidating assets of a recently acquired battery maker. Additionally, Nikola’s forecast for third-quarter revenue fell short of expectations, with estimates ranging from $18 million to $28 million compared to a projected $34.5 million.
Nikola is not the only electric vehicle startup struggling with production, delivery targets, and fundraising. Fisker, another EV maker, recently reduced its annual production target due to supply chain delays.
As it awaits additional capital, Nikola reported having $226.7 million in cash and cash equivalents at the end of the second quarter, compared to $441.8 million a year earlier. The company faced opposition from founder Trevor Milton, who stepped down in 2020 after fraud allegations and was later convicted, regarding the share issuance.
In a separate development, Nikola announced a narrower loss for the second quarter due to reduced production costs of its Tre battery-electric trucks.
The challenges faced by Nikola and other EV startups highlight the difficulties in scaling production and securing funds in the competitive electric vehicle industry. Despite these challenges, Nikola remains committed to its mission of revolutionizing the transportation sector with zero-emission vehicles.
Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco; Editing by Will Dunham, Anil D’Silva, Sriraj Kalluvila, and David Gregory