Nikola Corp., the electric-vehicle startup that recently partnered with General Motors Co., said its founder stepped down as executive chairman, coming just days after the company was reported to be the focus of investigations by U.S. regulators following a highly-critical short-seller report.
Trevor Milton, the social-media-savvy public face of the startup he founded in 2014, was replaced by board member Stephen Girsky, whose title will be chairman, Nikola said in a statement late Sunday.
The shakeup comes less than two weeks after the Phoenix-based company found itself in the crosshairs of short seller Hindenburg Research, which said Nikola deceived investors about its business prospects — claims that are now the subject of investigations by the U.S. Securities and Exchange Commission and, reportedly, the Department of Justice. On Sunday night, Milton said he planned to defend himself against “false allegations” in a statement issued via Twitter.
“Nikola is truly in my blood and always will be, and the focus should be on the company and its world-changing mission, not me,” Milton was cited as saying in Nikola’s statement. “So I made the difficult decision to approach the board and step aside.”
Nikola has faced a turbulent period in the aftermath of a short-lived share rally following GM’s surprise decision earlier this month to take a $2 billion stake and manufacture its new pickup truck. The Detroit-based automaker got a cash-free 11% equity position in its smaller partner in a bid to scale up and fast-track its own vehicle electrification efforts.
Girsky, 58, is a former vice chairman of GM who helped lead the carmaker out of bankruptcy.
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Nikola’s shares have roller-coastered since the company went public on June 4 in a reverse merger, with Girsky’s blank-check company VectoIQ. At one point, they soared so high the startup’s market value exceeded Ford Motor Co. After the third day of trading, Milton — who owns 35% of the company, based on regulatory filings — was worth $9 billion, making him the world’s 188th richest person, according to the Bloomberg Billionaires Index. His net worth is now valued at $4 billion.
The stock tumbled then after Hindenburg Research questioned the validity of Nikola’s claims about its electric-vehicle technology, accusing Nikola of being “an intricate fraud built on dozens of lies.” That drew the attention of financial regulators.
Milton countered, calling Hindenburg’s report a “hit job” in a tweet. He promised in a subsequent tweet to provide a detailed response to what he said were “one sided false claims.” He also posted videos on Instagram, including one laden with expletives, dismissing Hindenburg’s accusations.
While Nikola officially pushed back on Sept. 14, some of the company’s responses were more counterarguments than rebuttals.
The short-seller’s allegations aren’t the first time questions have been raised about Nikola. In June, Bloomberg reported that Milton exaggerated the capabilities of the company’s debut truck, Nikola One — purportedly a fuel-cell vehicle it never produced or brought to market. The company has denied making misleading statements.
Milton, like Tesla Inc. Chief Executive Officer Elon Musk, has relied on social media to promote his company. In February, he introduced the Badger truck via a tweet, calling it “the most advanced electric & hydrogen pickup, designed to take down the Ford Raptor.” On June 8 he tweeted that Nikola would start taking Badger reservations later in the month for “the most bad a– zero emission truck.” Potential buyers paid deposits as high as $5,000 — without even seeing a prototype of a vehicle that won’t go on sale until 2022.
Investors have sometimes struggled to keep up with Milton’s messages, especially given the evolving list of projects Nikola is pursuing: battery-electric big rigs in Europe, fuel-cell-powered semis in the U.S., an electric pickup to be built by GM, becoming the preeminent supplier of hydrogen for fleets of vehicles and vague proposals to enter the market for high-performance sports cars.
“It’s a bit confusing trying to follow Trevor on his various social-media outlets about the timing and cadence of communication of the different variables that you’re talking about,” Jeff Osborne, a Cowen & Co. analyst, told executives during Nikola’s first earnings call on Aug. 4.
Nikola has had a co-development agreement with Germany’s Robert Bosch GmbH since 2017 to develop key components like fuel cells, motors and battery packs. It plans to build a battery electric semi-truck with CNH Industrial NV’s Iveco at a facility in Ulm, Germany, by the end of next year. A fuel-cell semi truck is planned for 2023 which will be built at Nikola’s factory in Coolidge, Arizona. GM will provide the fuel cells and battery packs.