Nikola's Financial Loss Widens in Second Quarter

Nikola's Arizona headquarters. Nikola is building five prototype fuel-cell powered big rigs at the facility while it starts the next phase of construction. (Ash Ponders/Bloomberg News)

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Nikola Corp. posted a widening second-quarter financial loss as the zero-emission vehicle startup said it is moving forward with its battery-electric and fuel cell-electric trucks, despite financial setbacks and the federal indictment of the company’s former leader.

In a regulatory filing Aug. 3, the company reported a net loss of $143.2 million, or negative 36 cents per share, compared with a loss of $115.7 million, negative 43 cents, a year ago. No revenue was reported, as Nikola has yet to begin retail sales of its vehicles.

Available cash on hand declined to $632.7 million compared with $840.9 million in Q2 2020.

Russell

CEO Mark Russell said the global shortage of computer chips continues to be a problem, and Nikola is experiencing delays in receiving numerous parts. Chief Financial Officer Kim Brady said as few as half as many vehicles would be delivered as previously forecast.

Brady said the Phoenix-based company would deliver just 25 to 50 vehicles this year, down from a previous estimate of 50 to 100 vehicles.

Nikola has handed over millions of documents, emails and text messages, in addition to providing hundreds of hours of interviews to authorities investigating Milton, Russell said. In the regulatory filing, the company warned the ongoing investigations may impact its future business opportunities and “could cause stockholders to lose their entire investment.”

Nikola also acquired a 20% stake in the Wabash Valley Resources clean hydrogen project in West Terre Haute, Ind. Ground-breaking is expected to begin early next year and take about two years to complete.

Wabash Valley Resources said it is converting a gasification plant it purchased in 2016 to use solid waste byproducts such as petroleum coke combined with biomass to produce sustainable hydrogen for transportation fuel and base-load electricity generation while capturing CO2 emissions for permanent underground sequestration.

The completed facility is expected to produce up to 336 tons of hydrogen per day, enough to generate approximately 285 megawatts of clean electricity. The project is expected to require 125 full-time employees and may support 750 construction jobs.

The financial report comes just days after Trevor Milton, Nikola’s founder and former executive chairman, was released on $100 million bail, after being charged by federal officials that he lied about the electric and hydrogen-powered truck technology the company was developing, and, in the process, duped investors.

Trevor Milton (center) exits federal court in New York on July 29. (Angus Mordant/Bloomberg News)

In an indictment unsealed July 29 in Manhattan federal court, Milton was charged with two counts of securities fraud and one count of wire fraud.

Manhattan U.S. Attorney Audrey Strauss said Milton from November 2019 through last September “brazenly and repeatedly used social media, and appearances and interviews on television, podcasts, and in print, to make false and misleading claims about the status of Nikola’s trucks and technology.” She said at a news conference that the charges were “where the rubber meets the road.”

The Securities and Exchange Commission filed separate civil charges.

Milton’s lawyers said he is not guilty and would be exonerated. They said in a statement the case was “… a new low in the government’s efforts to criminalize lawful business conduct. Every executive in America should be horrified.

“Trevor Milton is an entrepreneur who had a long-term vision of helping the environment by cutting carbon emissions in the trucking industry. Mr. Milton has been wrongfully accused following a faulty and incomplete investigation in which the government ignored critical evidence and failed to interview important witnesses.”

The indictment also said that retail investors were harmed by the misleading statements including people with no prior stock market experience who began trading during the COVID-19 pandemic to replace or supplement lost income or to occupy time during the lockdown that resulted from the health crisis.

Some of them, it said, suffered hundreds of thousands of dollars in losses, including the loss of retirement savings or funds they had borrowed to invest in Nikola.

Milton exited the company last September.

Bloomberg News contributed to this story.

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Bloomberg News contributed to this story.