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A new report claims zero-emission vehicle start-up Nikola Motor has made a series of deceptive public statements and representations about its technology and business. The allegations include that Nikola staged a 2018 video of her signature hydrogen fuel cell truck driving and that she made misleading claims about her battery development efforts after a failed deal acquisition.
The allegations come from Hindenburg Research, which has a short position in Nikola stock. But they are following previous reports of Nikola’s misrepresentation and the broader skepticism by experts of the company’s aggressive claims.
The most striking claim in the Hindenburg report is that a video from January 2018 allegedly showing a Nikola One hydrogen fuel cell semi-truck moving on its own was staged. According to Hindenburg, the video actually showed the truck driving down a long, gentle slope. Hindenburg’s report includes a test confirming that the stretch of road shown in the video could accelerate a coasting vehicle to freeway speed, as well as text messages from a former Nikola employee appearing to confirm the tactic.
Given these claims, it is noteworthy that Nikola has repeatedly described the video as showing the truck “in motion”, which would be technically true even if the truck was not moving on its own. Bloomberg previously reported that Nikola and its founder, Trevor Milton, makes misleading claims on the capabilities of the Nikola One unit presented at a 2016 event.
Another major claim in the Hindenburg report is that Nikola and Milton twisted the company’s efforts to develop a new type of battery for use in electric vehicles.
In November 2019, Milton claimed that Nikola would soon unveil “the biggest breakthrough we’ve seen in the battery world”. These claims appear to have been based on the planned acquisition of a company called ZapGo, but by December Nikola had backed off the acquisition. In one Legal deposit March 2020, Nikola said that ZapGo “had nothing more than interesting research without the ability to commercialize its research.”
Despite withdrawing from the deal, Nikola has not revised its public message about an impending revolution in EV battery technology. In a june interview with Fortune and in other public statements, Milton has continued to promise an imminent unveiling of the technology. Milton claimed Nikola was working to commercialize battery technology that she had licensed by university researchers, while declining to name those researchers. Experts evaluating Nikola’s battery claims were skeptical of the company’s aggressive schedule.
Further questions about Nikola’s earlier battery allegations were raised by an announcement on Tuesday that Nikola would use battery technology licensed from General Motors in vehicles, including its upcoming Badger pickup truck. This announcement provoked both Nikola and GM stock to increase significantly. On Thursday, the Hindenburg report appears to push both stocks down, with Nikola losing almost 10% at time of publication and GM by almost 4%.
The Hindenburg Report also makes a variety of other allegations about Nikola and Trevor Milton’s deception, including alleged misstatements by Milton about previous companies he founded and sold.
Nikola sent Fortune a brief statement in response to Hindenburg’s report: “Nikola has been endorsed by some of the world’s most credible companies and investors. We are on the road to success and will not waver on the basis of a report filled with misleading information attempting to manipulate our stock.
Nikola did not address FortuneHindenburg’s questions about Hindenburg’s specific claims, including questions about whether the truck featured in the 2018 video was moving on its own or who Nikola’s battery development partners were by then summer 2020. The Twitter, Milton wrote“It will take the rest of the day to deal with the false unilateral allegations, but I will issue a detailed report to address them.” In the meantime, continue. “
Although its short position allows it to benefit from negative stock movements, Hindenburg Research has built a solid reputation in recent years based on extensive research into public misrepresentation and accounting irregularities in companies, including Club Smile Direct, SC Worx, and Bloom Energy. Many of Hindenburg’s claims about these and other companies have subsequently been confirmed by other reports, by regulators, or by the companies themselves.
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