Nikola (NKLA) has confirmed another round of layoffs as it finds itself in an impressive financial mess. The hydrogen-battery electric truck manufacturer is launching a few last-ditch efforts to avoid bankruptcy.
It has been more than 2 years since Nikola’s founder and former CEO was found guilty of fraud for lying to shareholders about the company’s technology.
Many thought it would be the end for the company, once worth $34 billion, and yet it’s still alive. Barely, but alive.
It hasn’t been an easy two years. As we previously reported, Nikola had massive issues with its battery-electric trucks that led to fires and recalling the entire fleet.
The company switched to its fuel cell-hydrogen truck production, but it is selling those at big losses and some customers are reporting some serious issues with them.
Nikola is losing roughly $200 million a quarter and that’s about what it had in cash at the end of last quarter. The company is now valued at about $100 million as the market expects an imminent bankruptcy.
Shareholders have grown frustrated as management has relied on issuing more shares to bring in some capital, but it dilutes the existing share ownership.
In a series of SEC filings this week, Nikola has disclosed that it managed to secure $65 million through a deal with noteholders. Based on its current burn-rate, it would give the company about another month.
Separately, Nikola announced that it is selling more shares in an attempt to raise $100 million.
However, the company also disclosed some serious concerns in the same filings.
Nikola confirmed that it doesn’t have enough money to get through the next quarter:
We currently estimate that our existing financial resources are only adequate to fund our forecasted operating costs and meet our obligations into, but not through, the first quarter of 2025.
That includes the recently secured $65 million but not the new $100 million it is trying to raise. The raise started 3 days ago, and Nikola has not announced the closing of the offering or the proceeds it managed to secure.
Nikola announced that it implemented further layoffs this month in order to reduce its burn-rate:
For example, in October and December 2024, we reduced our workforce in order to better align our staffing with our current needs.
The company warned that the layoffs may negatively impact its activities due to the potential “loss of institutional knowledge, decreased morale, an adverse impact on our reputation and challenges in attracting new talent.”
Nikola recently reiterated that it still hasn’t paid $80 million out of its $125 million settlement over misleading shareholders. A court has granted a $165 million reimbursement from its convicted former CEO Trevor Milton, but the company has so far failed to recover it.
Electrek’s Take
I have never been a big proponent of fuel cell hydrogen systems, but I did think they might have a chance for bigger vehicles.
WIth the advent of battery-powered trucks outperforming fuel cells, it doesn’t seem likely anymore. Maybe large ships will be the salvation for fuel cell? I don’t know.
What I do know is that Nikola is done.
Maybe a buyout could be its saving grace, but it looks unlikely. It doesn’t have much assets. It leases its facilities and it is holding $650 million in liabilities.
I don’t see any company wanting to take that on when Nikola is a few months away from bankruptcy and diluting its stock like crazy with this new offering and the $65 million worth of stocks that its noteholders are now allowed to sell.
If anyone is interested in its technology, it is better off waiting for the company to go under and get rid of its debt. Anyway, most of its critical technology comes from Bosch, which is still owed money.
Even if it does manage to raise this $100 million and manage to reduce its expanses through these layoffs, it’s no closer to delivering its fuel cell trucks profitably and it will only have enough funds to survive halfway through Q2 2025. In the meantime, its shareholders will only see more dilution.
I think this money would be better spent on other projects to remove emissions from trucking.
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