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Yes, Nikola and Trevor Milton Lied Through Their Teeth

Once the most promising automotive startups, Nikola saw quite a proverbial fall from grace in 2020. It doesn’t look like 2021 will be much different, despite obvious efforts to right all the wrongs that have been done.
At one point, Nikola and its over-confident founder and CEO Trevor Milton were promising the world to investors and potential customers. They would deliver an electric / fuel cell pickup to rival Tesla’s Cybertruck, the Badger, and they would also be bringing their flagship hydrogen-powered truck, Nikola One, into production, along with Two and Tre.

And that was just the top of the iceberg in terms of what they bragged about doing or being able to do in the foreseeable future.

All changed in September 2020, when short-seller Hindenburg published a damning report on how Milton in particular and Nikola in general had blown up a bubble with nothing but hot air inside, leeching cash from investors with outright lies. An “intricate fraud” is the exact phrase used to describe Nikola and all its claims of revolutionizing the auto industry.

The damning reports sent Nikola stock down, forced General Motors to admit to its mistake and back out of the deal to make the Badger and, more importantly, triggered separate investigations from the U.S. Securities and Exchange Commission and the Justice Department, as well as an internal review. Milton was eventually ousted as CEO but, as part of his exit, Nikola is paying his attorney fees.

The findings of that Nikola internal review, conducted by law firm Kirkland & Ellis, were made public and – what do you know?! – it turns out that the bubble was filled with hot air, indeed.

Nine of the statements made by Milton and Nikola have been found entirely or partially inaccurate, Bloomberg reports. As it so happens, it’s on these statements that Nikola built itself a reputation of the most innovative company, drawing millions in investments and pre-orders.

More to the point, Milton lied when he said that the Nikola One prototype shown in 2016 and then in the now-viral 2018 video was “fully functional.” Consequently, he also lied when he lashed out at the media for reporting that the truck could not have been operational since it was missing parts. And yes, they lied when they claimed One moved under its own power, when they had, in fact, towed it up a hill and had it rolling downwards.

Milton and Nikola lied about progress made with both One and the Badger, and the technology they used, had developed or were in the process of developing. They lied about using only in-house parts, and they lied about owning natural gas wells, which they used as backup to solar hydrogen production. They lied about the solar panels on the roof of the company’s HQ and how much energy they produced. They lied about the amount of hydrogen produced at the Nikola demo stations.

Hilariously, despite the fact that Nikola pretty much lied through its teeth to get investors, the company is fighting the notion that it’s a “fraud.” The internal review report, which was filed with SEC and was followed by a shareholder meeting, highlights the company’s current approach toward scaling down the scope of the operations. In other words, let bygones be bygones, and forget about how Nikola got started and focus on the future instead.

The future isn’t looking bright, either because the company is flailing financially. As noted above, Nikola is paying Milton’s attorney fees, which are almost as impressive as his elaborate lies. CNBC has the exact figures: $8.1 million in attorney fees so far for Milton, with a total of $27.5 million in legal expenses overall. And legal complications are only now starting to build up. That’s not a lot for an actual carmaker that builds and sells cars (or trucks), but it’s a fortune for a startup – especially if you add the $384.3 million in losses raked up in 2020 alone.

According to reports, Nikola still has some cash in the bank right now, but at the rate it’s going burning through it with lawsuits and investigations, drastic action will be necessary soon.

 
 
 
 
 

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