GM Scales Back Planned Partnership With Nikola

General Motors Co. announced it has signed a non-binding memorandum of understanding (MoU) with Nikola Corp. for a global supply agreement to provide its Hydrotec fuel cell system for Nikola’s Class 7/8 trucks.

The MoU replaces the previous transaction announced Sept. 8, which outlined a much broader cooperation between the two companies that included the development of an electric pickup truck, the Nikola Badger, and was expected to drive cost reductions through Nikola’s programs, including the Badger, Nikola Tre, Nikola One, Nikola Two and NZT electric vehicles.

“This supply agreement recognizes our leading fuel cell technology expertise and development,” said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain. “Providing our Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles is an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future.”

Under the potential agreement referenced in the MoU, GM would engineer its Hydrotec fuel cell system to the specifications mutually agreed upon by both companies. GM and Nikola will discuss the appropriate scope of services that GM would provide for the integration of the fuel cell system into Nikola’s vehicles. It is expected that the potential arrangement would be “cost plus,” and that Nikola would pay upfront for the capital investment for the capacity.

GM said the two companies will also discuss the potential of a supply agreement for GM’s Ultium battery system for Nikola’s Class 7/8 trucks. Besides killing – at least for now – plans for the Badger pickup, the MoU also ends the plan for General Motors to receive a $2 billion/11% equity stake in Nikola.

“We are excited to take this important step with GM, which provides an opportunity to leverage the resources, strengths and talent of both companies,” said Mark Russell,  chief executive officer of Nikola. “Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market. We believe fuel-cells will become increasingly important to the semi-truck market, as they are more efficient than gas or diesel and are lightweight compared to batteries for long hauls. By working with GM, we are reinforcing our companies’ shared commitment to a zero-emission future.”

The agreement between Nikola and GM is subject to negotiation and execution of definitive documentation acceptable to both parties. Nikola said the development of the Badger was dependent on an OEM partnership. Nikola said it will refund all previously submitted order deposits for the Nikola Badger.

This is yet another development in what has been a turbulent year for Nikola. Shortly after it announced its original deal with GM, the company was rocked by a report by financial analyst Hindenburg Research that accused Nikola and its founder Trevor Milton, of making exaggerated claims about its technology. Roughly two weeks later, Milton, who vigorously denied any wrongdoing, resigned as executive chairman.