Nikola, an EV startup once valued higher than Ford, has filed for Chapter 11 bankruptcy. In the wake of a high-profile scandal and a recall that rocked the company to its core, Nikola says it only has about $47 million in cash on hand.
This is likely Nikola’s last chapter (pun intended—sorry, not sorry), joining EV startups like Fisker and Lordstown Motors in bankruptcy. Given its tumult and headwinds, we’re almost sure Nikola is dead and gone.
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Nikola Motor Company
What Nikola is saying
In a statement, Nikola said the company and “certain of its subsidiaries” have filed Chapter 11 petitions in Delaware and a motion to pursue auction and sale under Section 363 of the US Bankruptcy Code. Nikola has also filed motions to allow limited operations to continue while it pursues liquidation or sale.
“We have faced various market and macroeconomic factors that have impacted our ability to operate. In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet, and preserve cash to sustain our operations,” said Steve Girsky, President and CEO of Nikola. “Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the company and its stakeholders.”
The company claims it has been pursuing acquisition for “months” before settling on bankruptcy.
If the courts approve Nikola’s motions and petitions, those interested would be able to submit binding offers for Nikola’s assets, which would be “free and clear” of Nikola’s incurred debt and certain liabilities.
Nikola Motor Company
The reality of the situation for Nikola
Shortly after the bankruptcy filing, Nikola’s stock fell over 38 percent, and the company is now valued at less than $50 million. In 2020, Nikola’s IPO valued it at more than $27 billion, making it more valuable than Ford at the time.
Nikola founder Trevor Milton was sentenced to four years in prison in 2023 for defrauding investors after a 2022 conviction on two counts of wire fraud and one count of securities fraud. The charges were filed after Nikola was discovered lying about its semi truck being fully self-driving.
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How Nikola got here
Nikola billed itself as a zero-emissions trucking company, claiming it had self-driving EV and hydroelectric trucks. It was among the first in the EV semi-truck segment, ahead of Tesla, with promises to revolutionize how we transport goods across the country.
Its flashiest demonstration showed an electric semi, which Nikola suggested was fully self-driving. After the company’s IPO, the now defunct short-selling firm Hindenburg Research published its findings, which ultimately proved the semi was not self-driving but just rolling down a hill.
This discovery, along with the 2023 recall of all its vehicles due to safety concerns and the subsequent conviction of its founder, proved insurmountable for Nikola.
Nikola Motor Company
Final thoughts
Like Fisker, the world was in awe of Nikola until we learned its vehicles weren’t what we were led to believe. “Fake it ‘till you make it” is only cool when you make something great.
Nikola overpromised and never delivered. Unless it has critical intellectual property or perhaps some production machinery that a buyer would find useful, even liquidation may be a hard path for Nikola.
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