We at TopMark Funding have talked about Nikola Corporation going public and how you can become a part-owner in the fledgling company. Now, it seems General Motors wants a piece of the action. The companies have announced plans to become part-owners of one another.
The companies became part-owners of one another by swapping stock shares. $2 billion in common stock each, to be exact (upon news of the partnership, GM stock rose over 9% and NKLA stock rose over 45%, making GM’s ownership of Nikola now larger than the other way around).
Beyond simply moving money from one pocket into the other, the partnership enables both parties to work together much more easily, in a manner somewhat similar to Disney and Pixar. Nikola is a much younger company than GM, and Executive Chairman of Nikola Trevor Milton says that thanks to the partnership, “Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence.”
Naturally, this causes the stock of NKLA to rise. After all, if a conglomerate such as GM sees potential in Nikola, perhaps there is something there that others have overlooked.
The partnership allows the two to work together on fuel-cell technology, rather than racing to beat each other to market. Milton expects the use of General Motor’s systems, such as the Ultium battery and Hydrotec fuel cell, will reduce the cost of production for its various tractor models, which can then either be passed on to consumers to give an edge in the market against the likes of Tesla or can be kept as a profit margin.
General Motors hopes that partnering with Nikola Motors will allow the company to more easily reach out into the truck market, which they had originally exited in the 1990s. Not just for Class 7 and 8, but also includes some lighter vehicles such as the Nikola Badger pickup truck.
The news comes off the heels of news in early June of this year, where VectoIQ Acquisition announced a reverse merger with Nikola Motor Company to form Nikola Corporation and to allow the company to be sold on the NASDAQ stock exchange. Current demand for their vehicles is strong; in June we reported 14,000 pre-orders totaling about $10 billion in revenue, and that number has most likely gone up in the past months rather than down.
Beyond GM, investors in Nikola include Bosch, CNH Industrial, and common investors willing to pay the share price, which naturally changes from day to day.
General Motors owns a large variety of vehicle brands, including Chevrolet, Buick, and Cadillac. With this partnership, Nikola retains ownership rights of its brands, such as that of the Nikola Badger.
As of now the production schedule for Nikola tractor vehicles has not been changed. Nikola’s electric Tre is still slated to be for sale in 2021, and the hydrogen-electric One and Two are still targeted for 2021. Considering Tesla’s delays in its production of the Semi, Nikola Motor Corporation has a strong chance of being the first electric vehicle to hit the market.
As mentioned before, you can purchase and trade these companies through the stock tickers GM and NKLA. We are not soliciting investment advice nor are we responsible for any gains or losses you incur from trading stocks, we are just telling you that the stock is there.
If you are a fleet owner hoping to add such a vehicle to your fleet, or you are a dealer who hopes to sell some of them to truckers, you can always count on TopMark Funding to help finance any transaction you need.