General Motors Company (NYSE:GM) has come to Nikola Corporation (NASDAQ:NKLA) rescue. The electric car startup has come under immense pressure in recent weeks after research firm Hindenburg questioned the company’s fuel cell technology as well as ambitions. The stock has shed more than 40% in market share in recent weeks as investors questioned its long-term prospects.
GM Affirms Nikola Pact
Shares of the embattled electric vehicle startup rallied 12% after General Motors reiterated it did not plan to terminate its proposed $2 billion deal. GM President Mark Reuss insists they continue to work on the opportunity of the $2 billion Nikola deal announced last month.
The sentiments affirm General Motors' strong belief in Nikola’s Fuel cell technology that has been the bone of contention in recent weeks. According to GM, the opportunity to put fuel cells into Class 7 and Class 8 vehicles is still big backed by strong operational cost advantages.
General Motors Executive comments are the first since talks as part of the $2 billion deal were put on hold and failed to close at the end of last month. In the aftermath of the Hindenburg, report it was highly expected that General Motors would pull the plug on the $2 billion deal.
GM-Nikola Deal
Under the terms of the proposed deal, General Motors acquired an 11% stake in the electric vehicle startup. In return, the automaker would have gained access to Nikola's battery and fuel cell technologies as well as help in the production of the Nikola Badger pickup.
The deal could be terminated if it fails to close by December 3. Nikola highly needs the deal to ramp up the development of its purported fuel cell technology. The company has seen its sentiments in the market turn sour. Its market cap has s contracted by more than half.
The stalemate has already resulted in the resignation of founder Trevor Milton who is accused of making many false claims in relation to the technology in question. Milton also faces sexual assault charges, claims raised by two women.
