General Motors Co. took a $2 billion equity stake in Nikola Corp. and partnered with the semi-truck maker to engineer and manufacture its Badger electric-pickup model.
GM will make in-kind contributions to take an 11% stake in Nikola and get the right to nominate one director to the company’s board, according to a statement.
The two companies expect the truck to start production by the end of 2022.
The partnership gives Nikola -- which has yet to generate any meaningful revenue -- an immediate boost of legitimacy and the industrial might of an established player while also benefiting GM. The Detroit-based automaker expects to receive more than $4 billion in perks from the deal. In addition to the equity value of the shares, it will be paid to manufacture the Badger, supply batteries and begin commercializing fuel cell technology for the semi-truck industry.
GM is increasing its exposure to alternate-fuel vehicles, an area that increasingly has captured the attention of investors. The Badger truck could compete against GM’s own electrification plans for future vehicles such as a promised Hummer pickup that goes on sales late next year. The Detroit-based automaker also may see it as a way to test demand for battery-powered trucks.
For Nikola, the partnership with GM is a vindication of its efforts to gain credibility as it moves toward production of its first vehicles. The Phoenix-based company engineered a reverse merger in June, gaining a public listing and more notice for its ambitious plans to enter the market for battery-powered and fuel cell-vehicles. It has garnered its share of fans and skeptics, who founder Trevor Milton has been known to engage with on Twitter, where he has promoted the company and sought to quell critics.
Milton, who also is Nikola’s chairman, has said the Badger will sell for between $60,000 and $90,000, which analysts say could be a profitable niche in the larger U.S. pickup market. He also has said he hopes the Badger will one day rival Ford Motor Co.’s F-150, which for 43 years has been America’s best-selling pickup.
As recently as a year ago, Nikola had no plans to build a pickup, just an idea that gelled in November after Tesla Inc. unveiled a prototype of its own futuristic electric truck. Nikola first unveiled the Badger in February and started totake pre-orders from buyers in June.
Nikola’s not alone in targeting pickup buyers with a more-sustainable option. Rivian Automotive Inc., an EV startup backed by Amazon.com Inc. and Ford, plans to start producing an electric pickup by June 2021. Ford promises an electric F-150 by 2022, and Fiat Chrysler Automobiles NV has said it is mulling an electrified version of its Ram pickup.
The Badger will be capable of doing 0-60 miles per hour in less than 3 seconds and, depending on the configuration, will have a maximum 600-mile range between charging sessions, according to the company’s website.