Nikola disputes fraud charges posed by Hindenburg report

Electric lorry company Nikola has defended itself against fraud claims by Hindenburg Research, calling a report by the short-selling firm “false and defamatory”. Hindenburg had claimed a video by Nikola of one of its lorries moving downhill was staged and the vehicle was freewheeling. Start-up Nikola, in which General Motors has bought an 11% stake, admitted the lorry was freewheeling but said it had not suggested it was moving “under its own propulsion”. Nikola said it had told the SEC about Hindenburg’s report, that it would co-operate in an SEC inquiry and had hired a law firm.

Nikola Corp., the buzzy electric trucking company, is defending itself against charges of fraud that were made by short-selling firm Hindenburg Research. The allegations came just days after GM announced it was taking an 11 percent stake in the startup.

Nikola said the report from Hindenburg Research is “false and defamatory” and was “designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short sellers, including Hindenburg itself.”

The startup said it has briefed the US Securities and Exchange Commission on the report and will cooperate with the agency regarding its “inquiry.” (A spokesperson for the SEC declined to comment.) The Phoenix-based company also said it had hired law firm Kirkland and Ellis to evaluate its options.

“false and defamatory”

Hindenburg’s report, released September 10th, is titled “How to Parlay an Ocean of Lies into a Partnership with the Largest Auto OEM in America” — a reference to the news that GM was teaming up with Nikola to help engineer and manufacture the startup’s battery-electric and hydrogen fuel cell vehicles. Hindenburg claims that Nikola had engaged in “lies and deception” in showcasing its electric vehicle technology, including staging a video that showed one of its trucks cruising down a hill.

“Our investigation of the site and text messages from a former employee reveal that the video was an elaborate ruse,” Hindenburg writes, “Nikola had the truck towed to the top of a hill on a remote stretch of road and simply filmed it rolling down the hill.”

In a statement Monday, Nikola said there were “dozens” of inaccurate statements in the report, and it outlined several examples. But the company isn’t disputing that it staged the video that appeared to show the truck as functional.

“Nikola never stated its truck was driving under its own propulsion in the video, although the truck was designed to do just that (as described in previous point),” the company states. “The truck was showcased and filmed by a third party for a commercial. Nikola described this third-party video on the Company’s social media as ‘In Motion.’ It was never described as ‘under its own propulsion’ or ‘powertrain driven.’”

“Nikola never stated its truck was driving under its own propulsion in the video”

The company said it ultimately decided not to complete the vehicle and instead shift resources to another truck called the Nikola Two. Nikola claims that a preproduction version of this truck, “hydrogen-electric powered semi-truck for the medium and long-haul trucking sectors,” will be ready for testing in 2021.

“This three-year-old video of a Nikola prototype is irrelevant except for the fact that the short seller is trying to use it for its main thesis,” the company added. “The fact is, Nikola has real working hydrogen fuel-cell powered semi-trucks.”

Founded in 2015, Nikola aims to make zero-emission big rigs using hydrogen fuel cell technology. While a number of companies like Tesla, Daimler, Freightliner, and other established players and startups are working on all-electric trucks, Nikola is one of the few pursuing hydrogen-powered big rigs.