Key Takeaways
- Electric vehicle startup Nikola on Wednesday filed for Chapter 11 bankruptcy.
- The company plans to hold an auction of its assets, pending court approval.
- Nikola once reached a higher market capitalization than Ford Motor before it had sold a single truck, but its vehicles would later be mass-recalled and its founder convicted of fraud.
Electric vehicle startup Nikola (NKLA) filed for Chapter 11 bankruptcy and plans to move forward with an auction of its assets, pending court approval, the company said Wednesday.
The hydrogen truck maker and the EV industry at large have “faced various market and macroeconomic factors” that affected the company’s operations, Chief Executive Office Steve Girsky said.
He said recent attempts to raise capital and sustain Nikola’s operations “have not been enough to overcome these significant challenges.”
Bankruptcy Follows Nikola’s Dramatic Rise
Nikola’s bankruptcy filing is the culmination of a dramatic few years. The company went public in June 2020 without selling a single truck and at one point reached a higher market cap than Ford Motor (F). Then came a mass recall of its vehicles in 2023 and a four-year prison sentence for founder Trevor Milton later that year on charges of misleading investors.
The company said it has roughly $47 million in cash on hand to support its bankruptcy activities. If an auction is approved by the court, parties will be able to submit bids to acquire Nikola’s assets.
Shares of Nikoka tanked nearly 40% intraday Wednesday. The stock has dropped from $21.18 a year ago to about 47 cents.