Nikola’s Founder Steps Down

Trevor Milton’s Departure From Nikola

It’s been a busy start to the week for the EV industry. Investors are buzzing about Tesla’s battery day (TSLA), but electric truck maker Nikola (NKLA) is also in the spotlight. The company announced yesterday that Trevor Milton, its founder, is voluntarily stepping down as Executive Chairman and board member. Milton is being replaced by Stephen Girsky, a former General Motors (GM) Vice Chairman who helped with Nikola’s stock listing and with the partnership between the EV truck maker and GM.

The announcement about Milton’s decision comes about two weeks after Hindenburg Research, a short-selling firm, published accusations against Nikola saying the company misled investors. Hindenburg’s report said that Nikola made false claims about its technology in order to expand and partner with other carmakers, including GM. Nikola denied the accusations and the Securities and Exchange Commission is currently investigating the report’s claims.

The Impact on Shares of Nikola and General Motors

On the news about Milton’s departure, Nikola’s stock plunged as much as 37% in premarket trading yesterday. GM, which took an 11% equity in Nikola several weeks ago, also saw its shares fall 4.73% yesterday.

Nikola made a successful public debut at the beginning of the summer following a reverse merger with a SPAC. Trever Milton owns 35% of the company and saw his net worth reach $9 billion just days after the listing. Since yesterday’s stock tumble, he is now worth about $4 billion.

A Partnership With an Outside Battery Provider

Nikola also raised eyebrows after it partnered with Romeo Systems, a company that will provide battery technology for prototypes of its Nikola Tre semi-truck. This is the company’s first semi truck model, and it plans to begin selling the vehicle by 2021. Nikola previously said it created its own battery technology, so the new partnership is facing scrutiny.

The recent string of events have put Nikola in a difficult position. The company’s leadership will have to work to regain investor trust.

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