There is no car.
That is the conclusion from Hindenburg Research after an extensive investigation behind the origination and current business model of Nikola Corporation (NKLA).
This alleged “intricate” fraud has culminated financially with GM acquiring $2 billion in stock (an 11% stake) in Nikola for non-cash contributions such as engineering and validating a truck for Nikola, $700 million in expense reimbursements, supply contracts, and 80% of the EV credits.
What are the critical problems with Nikola?
There is a laundry list of them.
Inexpensive hydrogen is fundamental to the success of Nikola’s business model. CEO of Nikola Trevor Milton misled hundreds of people and in multiple interviews to have succeeded at cutting the cost of hydrogen by 81% compared to peers.
He also claimed that the company is producing hydrogen.
Nikola has not produced hydrogen at this price or at any price, as he later admitted when pressed.
Trevor claims Nikola designs all key components in-house, but it seems that they have merely bought them from third parties.
Nikola actually buys inverters from a company called Cascadia. In a video showing off its “in-house” inverters, Nikola concealed the Cascadia label with a piece of masking tape.
Their order book has been gerrymandered by touting multi-billion dollars that aren’t real. U.S. Xpress reportedly accounts for a third of its reservations, representing $3.5 billion in orders, but U.S. Xpress had only $1.3 million in cash on hand last quarter.
The actual development of the car has never come to fruition or even started, but seems like an elaborate hoax just to get investors' money by producing fake commercials.
In 2016, Milton hyped “The Holy Grail” of hydrogen technology for trucking, but there has been zero evidence of this.
Milton stenciled in “H2” on the truck despite the vehicle displaying zero hydrogen capabilities
Constructing a zero-emission hydrogen truck is rather difficult. However, merely stenciling “H2” and “Zero Emission Hydrogen Electric” on the side of a non-functioning truck is much easier.
Even the design has been outsourced to a company called Stellar Strategy LLC. Stellar is a well-known producer of off-road vehicles who had advised Nikola on the open cabin version.
The biggest fraud, which can’t be glossed over, is the claim about its battery technology.
Nikola claimed to have cutting edge battery technology, but that was merely a lie.
They planned to buy Battery Tech but found out after it was a vaporware company created by a man who had been indicted months earlier after using his NASA expense account to hire prostitutes.
In 2019, after a signed partnership with Bosch and Powercell, Powercell terminated its partnership saying the business terms were “totally unacceptable”.
After this marginal behavior, Nikola went public then giving it access to billions of public funding even though it had never designed, built, or delivered any resemblance of a car since 2014.
Then the CEO said it produces hydrogen for under $3/kg, representing a 81% discount to the rest of the world, but later admitted it was not true.
What about its staff?
Nikola’s director of hydrogen production/infrastructure is Milton’s little brother, who paved driveways in Hawaii before his Nikola job.
Nikola’s head of infrastructure development is the former general manager of a golf club In Idaho.
Lastly, Nikola’s Chief Engineer was a pinball machine repair guy before his Nikola job.
Nikola is clearly a front for Milton to transfer money into his personal life and has cashed out $70 million around the IPO and amended his share lock-up from 1-year to 180 days.
If he is fired, his equity awards immediately vest, and he is entitled to $20 million over two years.
Milton likely will never even start building a real car.
This is basically deception ranging from passing off fake products as real, staging of misleading videos, which require extensive premeditation, planning, and execution.
He has lied about the abilities of Nikola and the company simply has never even tried to build a car that the company is focused around.
The Tesla (TSLA) and Elon Musk narrative has made investors gullible to throw money at the next Tesla even if it is all a fake.
The money is literally funneled into Milton’s personal life allowing him to buy $50 million of Utah real estate.
The question now is what will GM do after they find out the truth about the matter?
GM might try to recoup the $2 billion (11% stake) if there is a possibility of reclaiming that capital, but if that is sunk money, they might choose to make the best out of a bad situation and elevate Nikola and make a real car out of it.
The only way to save this sinking chief is for GM to gut this fraudulent enterprise and put real engineers in Nikola with its real battery technology and leverage the brand of Nikola.
Nikola also has the support of the U.S. Central Bank that has propped up 40% of the S&P, are essentially zombie companies that cannot even service the interest on their debt.
Could this just be a $2 billion marketing cost for GM? It just might be.
In any case, there are many twists and turns coming up and GM might choose to write off $2 billion.
Unless GM decides to save Nikola, there is no new money coming in and that would be the time to short the stock.
The abomination that is the U.S. financial system encourages financial manipulation on an immense scale because the access to easy money has emboldened the conmen to come up with companies like this.
The insane reality is that CEO and Founder Trevor Milton was able to perpetuate this fraud for so long and cash out from investors who did not do any due diligence.
Nikola is now 7 years old and there are no signs of a car, only fake commercials of one.
The ball is squarely in GM’s court.
If GM cuts its losses, Nikola will never get another dime from any outside investor and is almost guaranteed that they will most likely not be able to produce a real car let alone a quality one with a golf club general manager, concrete repairman, and pinball repair guy at its helm.
I would be short GM – this strikes me as pitiful desperation. They have no chance of catching Tesla and over time, Nikola will fail unless rescued by outside technology, engineering, and management.
