General Motors has made a deal with Nikola Corp to help engineer and build the electric truck company’s electric pickup truck in exchange for an 11 percent stake. The agreement is the latest venture between a traditional automaker and an electric-vehicle upstart.
In addition to an 11 percent stake in Nikola, the partnership will give GM $2 billion in equity and give General Motors the right to nominate one director to Nikola’s board.
General Motors will engineer, validate, and manufacture the electric battery and fuel cells for Nikola’s Badger pickup truck. As part of the deal, the electric-truck startup will use General Motors’ Ultium battery system and Hydrotec fuel-cell technology.
This deal will also make General Motors the exclusive supplier of fuel cells to Nikola’s Class 7/8 trucks in all areas besides Europe, the companies said.
“Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn’t dream of a better partnership than this. By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence,” said Nikola Founder and Executive Chairman Trevor Milton.
Nikola Corp. broke ground on its first U.S. vehicle-manufacturing plant on July 23, a significant step for its foray into the American alternative-fuel market. The plant is set to open in 2021 and will produce Nikola’s hydrogen-powered semi-trucks.
Nikola had previously said it planned to partner with an established automaker to build the Badger pickup. The power for the pickup trucks is provided by both an electric battery and hydrogen fuel-cell technology.
The announcement of the partnership caused the stock prices for both companies to jump. Shares for Nikola surged as much as 53 percent in premarket trading. Additionally, General Motors’ shares jumped as much as 9.1 percent during premarket trading.
The partnership between General Motors and Nikola furthers General Motors’ foray into the electric vehicle market. General Motors has long been working on hydrogen-powered vehicles. One of the results of this work is the Hydrotec engineering process results used to manufacture the fuel cells for the Badger.
The fuel-cell technology the company will utilize combines hydrogen stored in a tank with oxygen from the air to produce electricity, with water vapor as the byproduct.
“This strategic partnership with Nikola, an industry leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems. We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability. In addition, applying General Motors’ electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future,” said General Motors Chairman and CEO Mary Barra.