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Nikola Buys Romeo Power to Produce and Engineer Its Own Battery Packs

When Trevor Milton was in charge of Nikola, we had the impression that it had a revolutionary battery technology and that it was similar to Tesla in the sense of doing everything on its own. That was not true: Nikola pretty much followed the same recipe as more traditional carmakers, only with clean tech. The company just announced a deal that proves that: it will buy Romeo Power to produce and engineer its own battery packs.
Nikola will buy Romeo Power to built its battery packs in-house 16 photos
Romeo Power Banyan ModuleRomeo Power Banyan ModuleRomeo Power Banyan ModuleRomeo Power Menara Pack SeriesRomeo Power assembly linesRomeo Power assembly linesNikola will buy Romeo Power to built its battery packs in-houseRomeo Power assembly linesRomeo Power assembly linesRomeo Power assembly linesRomeo Power assembly linesRomeo Power assembly lines2170 cells used by Romeo PowerRomeo Power assembly linesRomeo Power Banyan Module
Currently, Romeo Power offers two products: the Banyan Module and the Menara Pack Series. The Banyan Module is based on 2170 cells connected in series or parallel, depending on what each customer wants. The company also promises it has “high packaging efficiency, high energy density, and structurally integrated cooling system.”

The Menara Pack Series is the most suitable one for Nikola’s plans. Romeo Power states it can power “a range of commercial vehicles spanning from Class 3 delivery vehicles to the largest, long-haul Class 8 vehicles.” Menara means tower in Malay, which is also the name of native Malaysian trees. The company did not say why it wanted to pay tribute to them.

Being able to make its own battery packs will not be the only contact point with Tesla in this deal. Romeo Power was founded in August 2016 by former Tesla and SpaceX engineers. Even if these guys have completely departed from what they helped to develop for Tesla – which is not very likely – what they learned there would undoubtedly help Nikola.

The purchase will be an all-stock transaction. In exchange for Romeo Power’s shares, Nikola will give its own stock in an exchange ratio of $0.74 per RMO share. That’s 34% more than what Romeo Power’s shares were valued on July 29. In total, Nikola will spend $144 million to buy the battery pack maker. Nikola already was Romeo Power’s largest customer before the deal was struck.

On August 2, Nikola will try to increase the number of its “authorized but unissued common stock.” However, it said it does not need this to be approved to finish the deal with Romeo Power. If all goes well, it should be concluded in October 2022. Nikola estimates it will help it save $350 million by 2026, or more than double what it will spend buying Romeo Power.

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