DoJ Joins SEC To Inquire Electric-Truck Maker Nikola Over Alleged Fraud
Electric-truck startup Nikola Corp., a General Motors Co. partner, is being inquired by the U.S. Justice Department, along with the U.S. Securities and Exchange Commission, over fraud allegations, reports said citing people familiar with the matter.
The company is accused of misleading investors by making exaggerated claims about the progress it made in developing key technology needed for new models. The federal prosecutors are conducting the inquiries following a report by short seller Hindenburg Research alleging Nikola deceived investors about its business prospects.
In pre-market trading Wednesday, Nikola shares were losing around 7 percent. The stock is down 2 percent on regular trading.
A report by the Wall Street Journal noted that the DoJ’s inquiry is being handled by the Manhattan U.S. attorney’s office, working in line with the SEC that has initiated its own examination of the claims about Nikola.
Meanwhile, Nikola responded that the short seller report had dozens of inaccuracies and that it was planning to bring the actions of the activist short-seller, together with evidence and documentation, to the attention of the SEC.
Nikola, considered as the competitor of electric auto maker Tesla Inc., began trading on Nasdaq in June under ticker symbol, “NKLA.”
Last week, General Motors said it would take a $2 billion stake in the Arizona-based manufacturer of battery-electric and hydrogen-electric vehicles. As per the deal, GM will manufacture Nikola Badger, a fully-electric and hydrogen fuel cell electric pickup truck, and will also be an exclusive supplier of fuel cells globally-outside of Europe- to Nikola for Class 7/8 trucks. Meanwhile, Nikola will utilize GM’s Ultium battery system and Hydrotec fuel cell technology.
Nikola is expected to generate revenue by 2021 with the roll-out of its Nikola Tre Class 8 BEV, followed by the Nikola Two Class 8 FCEV starting in 2023.
The company in August received a minimum order of 2,500 electrified refuse trucks from Republic Services, expandable up to 5,000.
In May 2018, Nikola had filed a lawsuit against Tesla alleging patent infringement.
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