Hydrogen truck maker Nikola Motors
still battling to survive after its accumulated losses grow to $2.4bn
![](images/images_08_08_2023/eac8b1f49c970b864c23d580ac370fa5.jpg)
Shares in US manufacturer nosedive as CEO
steps down and shareholders agree to dilute stock
Hydrogen and battery-electric truck manufacturer
Nikola has posted a net loss of more than $217m for the second quarter
of this year — almost 26% further in the red than the same period last
year.
In a filing to the US Securities and Exchange
Commission (SEC), it admits that its accumulated losses since start-up
have now reached $2.4bn, with continuing doubts over whether the
company can remain a going concern over the next 12 months.
“We believe that we will continue to incur
operating and net losses each quarter until at least the time we begin
to generate significant margin from our trucks, which may not happen,”
the company notes in its filing, which is dated 4 August.
“We have determined... there is a substantial doubt that we will have
sufficient funds to satisfy our obligations through the next twelve
months from the date of issuance of this Quarterly Report.”
It continues: “Our ability to continue as a going concern is dependent
on our ability to obtain the necessary financing to meet our
obligations and repay our liabilities arising from the ordinary course
of business operations when they become due. The outcome of these
matters cannot be predicted with any certainty at this time.
“If we are unable to raise sufficient capital when needed, our
business, financial condition and results of operations will be
materially and adversely affected, and we will need to significantly
modify or terminate our operations and our planned business
activities.”
In February, Nikola had told the SEC that its deficit was $2bn, with a
similar warning that it may collapse within a year.
At that time, the then CEO, Kim Brady, who has
since retired, declared that the warnings in the February filing
reflected the opinions of its auditor, Ernst & Young, and that the
company fundamentally disagreed with its assessments, stating that it
was merely “accounting language” unreflective of reality.
Nikola declared in its new filing that it would push cash spend below
$400m this year and streamline its operations with a focus on selling
trucks in North America, slashing jobs, exiting a European joint
venture with Iveco and offloading its Phoenix Hydrogen Hub to
Fortescue in the process.
And while the company’s spend on operating activities and purchase of
new properties, plants and equipment for the first half of 2023 has
reached nearly $375m, this started to decline in Q2.
Nikola only spent $148m on these activities, around 17% less than the
$179m spent in the second quarter of 2022.
However, the firm has also seen its long-term debt and finance lease
liabilities increase from $290m at the end of 2022 to $348m at the end
of June.
At the end of last month, the company started serial production of its
hydrogen fuel-cell truck, with first deliveries planned for September.
But while Nikola has racked up orders for more than 200 hydrogen
fuel-cell trucks from 18 customers, many of these are still subject to
an actual purchase agreement being signed before this revenue can be
recognised.
As such, the company’s net loss for the second quarter of this year
was $217m, compared to a net loss of nearly $173m in Q2 the previous
year.
Stock dilution and CEO stepping down
Nikola’s shareholder meeting at the end of the quarter approved a
proposal to increase the authorised number of shares through a $100m
common stock offering — a measure that had been introduced in an
effort to raise capital for the struggling vehicle manufacturer.
The company had previously adjourned a vote on this proposal twice, as
it lacked the votes to pass the measure.
While share price closed at $3.395 on 3 August — the highest since
November 2022 — this dropped to $2.50 the next day following the
release of Q2 results and the passage of the share dilution proposal.
Nikola’s CEO Michael Lohscheller also announced on 4 August that he
would to step down at the end of the month for family reasons, and
will be replaced by Steve Girsky, the firm’s chairman of the board
since September 2020.
Girsky is the third CEO of Nikola since founder Trevor Milton, who
stepped down from his role in June 2020 to become executive chairman.
Milton resigned in September that same year over allegations of fraud
by short-seller Hindenburg Research, including an accusation that a
promotional video of its Nikola One semi-truck apparently travelling
via its own propulsion was in fact rolling down a hill.
Milton has since been convicted of one count of securities fraud and
two counts of wire fraud. (Copyright)
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