Nikola boss quits as investigations heat up

Nikola Motor founder Trevor Milton has resigned as investigations continue in the US into allegations the fuel cell and battery electric start-up misled investors about its technology and capabilities.

Riding high just months ago in the wake of reverse-merger that made him an instant billionaire, Milton has now stepped away in an attempt to lessen the impact of a damaging report by an investment fund into Nikola’s practices.  

The report was released just days after Nikola completed a supply and technology deal with General Motors and resulted in probes by both the Securities and Exchange Commission and the Department of Justice.

We reported Nikola’s tie-up with GM here and the damning report by self-admitted short-seller Hindenburg Research here.

Since our last report Nikola made an attempt via its lawyers to rebut Hindenburg’s allegations. But it didn’t deal with them all and actually confirmed a key claim that a prime-mover in a promotional film was rolling downhill rather than moving under its own propulsion.

As justification, Nikola said it had never claimed the vehicle had a working fuel cell powertrain.

“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 said in a statement.

“So I made the difficult decision to approach the Board and volunteer to step aside as executive chairman.”

A self-styled rival to Elon Musk and Tesla, Milton was a charismatic leader prone to extended social media musings. Sound familiar?

His decision to quit has potentially cost Milton US$10 million in consulting fees according to an SEC filing.

Milton’s place has been taken by Nikola board member Steve Girsky, who has been appointed chairman.

It was Girsky’s blank cheque company VectoIQ that facilitated the Nikola merger and the former GM board member also played a key role in hooking the two auto companies together.

GM received an 11 percent stake in Tesla then valued at US$2 billion. When the deal was announced stocks in both companies lifted, but the Milton controversy has since triggered falls.

Despite all the issues, GM says it remains committed to the Nikola deal. Another key partner, Bosch, says the same thing.

“Bosch has been a supplier to Nikola for a number of years and invested in the company in its early financing rounds. We intend to continue working together with Nikola and remain in close contact with the company and its management,” the company said in a statement.