Thu, Sep 10, 2020 page10

• General Motors to make electric pickup truck and supply batteries for Nikola

  • AP, DETROIT, Michigan
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  General Motors Co (GM) on Tuesday announced its second major electric vehicle partnership in less than a week, this time, a US$2 billion deal with start-up Nikola Corp.

  GM is to take an 11 percent ownership stake in the Phoenix, Arizona, company, and would engineer and build Nikola’s Badger hydrogen fuel cell and electric pickup truck. The Badger is expected to be in production by the end of 2022.

  GM would also help with cost reductions for Nikola’s other vehicles, including heavy trucks, and the company would use GM’s battery system and hydrogen fuel technology.

  

  General Motors Co chief executive Mary Barra speaks at the company’s Orion Assembly Plant in Lake Orion, Michigan, on March 22 last year.

  Photo: Reuters

  In exchange for the 10-year deal, GM is to receive US$2 billion of Nikola’s newly issued common stock that is to come in three increments through 2025.

  News of the deal sent shares of both companies surging despite a broader-market downturn. Nikola’s shares jumped US$14.50, or 40.8 percent, to close on Tuesday at US$50.05. GM advanced US$2.38, or 7.9 percent, to end at US$32.38.

  The move sets up GM for a new revenue stream and possibly a change in its business model, essentially becoming a parts supplier to other companies for electric vehicle frames, batteries, controls and components.

  GM chief executive Mary Barra said on a conference call that GM has a “platform that others can use that’s going to give us scale and help us drive efficiency.”

  She said that the electric vehicle platform and batteries are attractive to other companies, which is a huge opportunity for GM.

  “We’re going to leverage that and really seize the opportunity that we have to grow,” she said.

  However, she would not comment on whether GM is in talks with other companies.

  Nikola would be responsible for the sales and marketing of the Badger, but it would be built on GM’s new battery electric truck underpinnings and use GM fuel cell and battery technology.

  GM would also supply batteries for other Nikola vehicles, including heavy trucks.

  GM has its own battery electric truck, a GMC Hummer, due to go on sale a year ahead of the Badger.

  The deal is the second major partnership announced by GM this month, as it lines up companies to share in the costs of developing electric and autonomous vehicle technology.

  On Thursday last week, GM said that it would join with Japanese automaker Honda Motor Co to share the costs of building vehicles powered by batteries and internal combustion engines.

  Nikola founder and executive chairman Trevor Milton that the agreement relieves his firm of the expense of building another factory to make the Badger, which is a little larger than a Chevrolet Silverado.

  However, the company would keep building a US factory in Coolidge, Arizona, to make heavy trucks.

  Nikola, founded in 2015, has not made a profit yet and lost US$86.6 million in the second quarter.

  The company expects to save more than US$4 billion in battery and powertrain costs over 10 years.
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