Nikola files for bankruptcy while struggling with massive debts
- Nikola Corporation filed for Chapter 11 bankruptcy with debts totaling approximately $10 billion.
- The company reported significant production losses due to sluggish demand and high operational costs.
- The filing underscores ongoing challenges in the electric vehicle market, sparking concerns over the viability of new startups.
In February 2025, Nikola Corporation, a once-promising electric vehicle manufacturer based in Phoenix, Arizona, filed for Chapter 11 bankruptcy. The company, which had become known for its ambitious hydrogen-powered trucks, faced significant challenges in the market. Declining demand for electric vehicles, high production costs, and macroeconomic pressures led to financial turmoil. Nikola's production ramp-up occurred in 2024; however, the company experienced substantial losses, with reports indicating hundreds of thousands of dollars lost on every vehicle sold due to fleet operators' hesitance to adopt electric technologies amid high borrowing costs. Founded in 2014, Tesla's rival Nikola went public in 2020 before generating any revenue from vehicle sales. The company's stock saw a sharp decline post-bankruptcy filing, dropping by 40% and undervaluing the company at under $50 million. Nikola's initial successes attracted big investors such as General Motors, which initially held an 11% stake. However, amidst significant production issues, including admitting to deceptive marketing practices involving a promotional video, Nikola struggled to maintain investor confidence and customer interest in its products. By the end of September 2024, Nikola reported a cash reserve of $198.3 million, down significantly from $464.7 million at the close of 2023. The company's promising manufacturing facility in Coolidge, Arizona, could produce 2,400 trucks annually, but substantial debt overshadowed any operational capacity. Documented sources indicated that Nikola had debts nearing $10 billion while assets, such as manufacturing facilities and stock, were estimated between $500 million and $1 billion. The bankruptcy filing emphasizes the broader struggles faced by the electric vehicle industry, echoing Tesla's first annual sales decline in 2024 and highlighting the impact of macroeconomic factors on new electric vehicle startups. Nikola's CEO Steve Girsky noted various challenges contributing to the company's inability to sustain operations, reflecting a common narrative of a beleaguered industry grappling with the dual pressures of high operational costs and lack of consumer demand. The filing illustrates the fragile nature of electric vehicle startups amid changing economic landscapes.