Nikola, the U.S. electric and hydrogen truck maker once touted as the next Tesla filed for bankruptcy protection on Wednesday after a prolonged financial struggle.
The New York Times reported that Nikola announced in a statement that it has filed for bankruptcy protection under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. The company has also requested to proceed with auction and sale procedures under Section 363 of the bankruptcy code.
CEO Stephen Girsky explained that, like many in the EV sector, Nikola has grappled with various market and macroeconomic headwinds that have impacted its operations. He noted that these measures proved insufficient despite recent efforts to boost capital and reduce debt.
Nikola has struggled to generate revenue in recent quarters due to low vehicle deliveries. As of late last year, the company held $200 million in cash and $270 million in long-term debt. Rumors of imminent bankruptcy sent the stock price tumbling earlier this month.
On the announcement day, the stock plummeted 39% on the New York Stock Exchange, bringing its year-to-date decline to 61%.
Founded in 2015, Nikola set out to develop long-haul semi-trucks powered by hydrogen and electricity. After its 2020 IPO on the NYSE, the stock soared as investors hoped for a repeat of Tesla’s success.
The company’s fortunes reversed when negative assessments of its technological capabilities and business prospects emerged. A turning point came when Hindenburg Research exposed that Nikola’s promotional video featuring a hydrogen-electric truck was filmed on a downhill slope.
Nikola’s founder, Trevor Milton, resigned and was later convicted of fraud for misleading investors with unproven technology.
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