Troubled electric vehicle manufacturer Nikola Corporation has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware after failing to secure a buyer or raise additional funds to sustain its operations.
The Arizona-based company plans to maintain some direct service activities and continue fueling operations until March 2025, after which it will need external assistance to remain operational.
“In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet, and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the Company and its stakeholders,” Nikola President and CEO Steve Girsky stated.
Nikola President and CEO Steve Girsky (Credit: Nikola Corp)
Financial Woes and Asset Sale Plan
Court filings reveal that Nikola’s assets are valued between $500 million and $1 billion, while its liabilities range from $1 billion to $10 billion. The company’s severe financial difficulties stem from its struggle to secure funding, as well as mounting losses incurred on every unit sold, which have rapidly depleted its cash reserves.
Over the past months, Nikola, alongside its financial and legal advisors, conducted an extensive review of potential alternatives to sustain operations. After exhausting all possible avenues, the company concluded that a structured asset sale and an orderly wind-down of its businesses would be the best course of action to maximize value for stakeholders.
If approved by the Court, the proposed bidding procedures would allow interested buyers to submit binding offers to acquire Nikola’s assets. The company has made due diligence materials available to attract both strategic and financial buyers, with assets expected to be sold free of indebtedness and certain liabilities.
Market Reaction and Future Prospects
Following the bankruptcy announcement, Nikola’s stock price plummeted 51.83%, trading at $0.3950 per share at 8:06 AM ET. This steep decline reflects investor concerns about the company’s future and the feasibility of a successful asset sale.
Despite its bold ambitions to revolutionize the hydrogen-powered freight truck industry, Nikola struggled with financial mismanagement, production hurdles, and a loss of investor confidence. The company’s fate now hinges on the success of its court-supervised sale process and whether potential buyers see value in its remaining assets.
Nikola Corp at a Glance
Year founded: 2014 Headquarters: Phoenix, Arizona, U.S. Revenues: $71.8 million (9M 2024) Employees: 735 (Oct. 2024)
