MW Another EV maker goes bust. Nikola's stock plunges after bankruptcy filing.

By Tomi Kilgore

Nikola to keep up 'limited operations' and will pay its employees while it pursues an auction and sale process

Nikola Corp. became the latest EV maker to go bankrupt on Wednesday, as the Phoenix-based battery-electric and fuel-cell-electric truck and van maker voluntarily filed for Chapter 11.

The company said it has also filed to pursue an auction and sale process, and to ensure its "limited operations" can continue, including paying its employees, during the sale process.

"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 Chief Executive Steve Girsky. "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."

Nikola's stock $(NKLA)$ sank 41% in morning trading, and had been down as much as 54.5% at its all-time intraday low of 35 cents hit moments after the opening bell. The selloff comes a day after it had soared 41.4%, to have its best day since July 13, 2023.

Among other EV makers, Tesla Inc.'s stock $(TSLA)$ climbed 2.9%, shares of Rivian Automotive Inc. $(RIVN)$ lost 2% and Mullen Automotive Inc. shares (MULN) tumbled 19.9%.

The company's bankruptcy comes after Fisker went bankrupt in 2024 and Lordstown Motors filed for bankruptcy in 2023.

Nikola said it has about $47 million in cash on hand to fund its activities through the sale process. The company plans to provide limited service and support for its trucks currently in use, including certain hydrogen fueling operations, through March 2025.

The company said it as it goes through the sale process, it "cannot be certain that the company's security holders will receive any payment or other distribution on account of their shares following such sales."

Recent filings by some of the company's larger shareholders showed that New York-based Antara Capital owned 10.1 million Nikola shares, or 8.8% of the shares outstanding, Japan's Nomura Holdings owned 7.9 million shares. Also, Canada's Bank of Nova Scotia owned 4.7 million shares and Norway's Norges Bank owned 3.5 million shares.

On Feb. 18, the company put in place a "retention bonus program," in which certain "vital" employees are eligible to receive a lump-sum cash payment of between 10% and 50% of their annual pay if they stay with the company during the sale process.

Nikola's bankruptcy wasn't exactly a surprise. The company has been warning in its audited financial filings for the past two years that, given its funding needs and continued losses, there was substantial doubt about its ability to continue as a going concern.

The company had enacted a 1-for-30 reverse stock split in June 2024, when the stock was trading just above 30 cents a share, to boost its share price so it could stay listed on the Nasdaq exchange.

California-based electric truck and van maker Mullen Automotive had just enacted a 1-for-60 reverse stock split on Tuesday, just five months after it enacted a 1-for-100 reverse split. Effectively, the moves multiplied the stock's stock price by 6,000, in an effort to keep the price above the minimum bid requirement of $1 to remain listed on the Nasdaq.

Mullen's has had "going concern" warning language in its annual reports every year since the fiscal year ended September 2020.

Separately, Mullen reported Wednesday a net loss for the quarter to Dec. 31 that widened to $114.9 million from $61.4 million in the same period a year ago, and revenue of $2.9 million versus no revenue last year.

The company spent $27.8 million in cash in the latest quarter, to bring its cash holdings down to $2.7 million as of Dec. 31 from $10.7 million as of Sept. 30.

Nikola's stock has now plummeted 76.7% over the past three months, while the Global X Autonomous & Electric Vehicles ETF DRIV has gained 2.7% and the S&P 500 index SPX has tacked on 3.4%. Mullen's stock has dropped 94.8% over the same time.

-Tomi Kilgore

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February 19, 2025 10:00 ET (15:00 GMT)

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