Shares in Italy's CNH down 6.2% after Nikola founder steps down

Andrew Cummings
September 21, 2020

Nikola, a startup working on battery- and hydrogen-electric trucks, announced Sunday that its executive chairman and founder, Trevor Milton, has stepped down.

CNH Industrial owns 7.1% of Nikola Corp.'s share capital.

Milton, in a statement released on his Twitter account, has said that he asked to be removed from his post to distance himself from the company, which recently announced a strategic manufacturing partnership with General Motors, while he works on defending himself against what he claims are false allegations levelled against him.

Nikola has rejected all the accusations and threatened to take legal action against Hindenburg. A report from Hindenburg Research from September 10 said Nikola's success was "an intricate fraud" and based on "an ocean of lies" including a video showing a truck rolling downhill to give the impression it was cruising on a highway, and stenciling the words "hydrogen electric" on the side of a vehicle that was actually powered by natural gas.

In response, on 14 September, Nikola issued a public statement, saying: "Yesterday, an activist short-seller whose motivation is to manipulate the market and profit from a manufactured decline in our stock price published a so-called "report" replete with misleading information and salacious accusations directed at our founder and executive chairman".

Hindenburg accused Nikola of deceiving investors about its business prospects - claims that are now the subject of investigations by the US Securities and Exchange Commission and, reportedly, the Department of Justice.

Two days prior to announcing Hindenburg, GM announced that it took an 11% stake in Nikola, worth around $2 billion, to make Tesla Inc. electric pickup trucks and chose to engage in a relationship.

"We will work with Nikola to close the transaction we announced almost two weeks ago to seize the growth opportunities in broader markets with our Hydrotec fuel cell and Ultium battery systems, and to engineer and build the Nikola Badger", GM said in a statement Monday morning. The deal gives GM another revenue stream for its hydrogen fuel cell, battery and electric vehicle research, positioning the company as a supplier to others who want to enter the market.

GM executives had earlier said it had conducted "appropriate due diligence" before signing the agreement with Nikola. Auto companies, he said, often unveil concept vehicles that aren't powered by the system they're showing off, he said.

The news comes just weeks after Nikola struck a major deal with GM to build an electric pick-up truck.

Electric vehicle battery maker stock LG Chem also fell 5.9 percent as investor doubts about its proposed split-off plan resurfaced, coupled with Nikola uncertainties.

The Phoenix-based company said in a statement that it had accepted Trevor Milton's resignation and that he would be replaced by Stephen Girsky, a Nikola board member and former vice-chairman at General Motors (GM).

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