Nikola Held Talks with BP on Hydrogen Fuel Network

(Bloomberg) -- Nikola Corp. was in advanced talks with BP Plc over a partnership to build hydrogen fuel stations shortly before a short-seller report raised allegations about the startup’s credibility and capabilities, according to people familiar with the matter.

The companies had an agreement in principle to collaborate on the project for a hydrogen fuel network, which would undergird a plan by Nikola to lease fuel cell-powered trucks, the people said, asking not to be identified discussing private information.

Nikola hoped to announce the deal with the oil major just days after publicizing a separate partnership with General Motors Co. to make a battery-powered pickup truck, one of the people said. Representatives for BP and Nikola declined to comment.

Shares of Nikola fell by as much as 20% on Wednesday. They were down 19% to $22.96 as of 2:21 p.m. in New York -- well below its price after going public in June through a reverse merger.

Investors have been confused at times by Nikola’s business model and evolving list of projects -- from electric and fuel-cell semi trucks to a pickup to being a maker and distributor of hydrogen. But hydrogen infrastructure is a large part of the company’s value proposition, according to executives’ statements and a presentation to investors in April.

Nikola plans to bundle the cost of hydrogen fuel and maintenance with its fuel-cell semi trucks as part of a seven-year or 700,000-mile lease. To achieve this, Nikola aims to build a network of 700 fueling stations across North America in the next eight to 10 years, according to a filing in March.

A deal could still happen as the startup, whose stock has collapsed after reports of regulatory probes and claims of deception, had a stated ambition of announcing a hydrogen partner by the end of this year. Nikola has denied misleading investors.

Nikola’s talks with BP were first reported by the Wall Street Journal.

Nikola executives have said the company’s assumed cost of producing hydrogen, which it claims will be $2.47 per kilogram, is based on its ability to buy renewable electricity -- solar, wind, hydroelectric -- at wholesale rates from utilities or energy partners.

The Phoenix-based company has an agreement with Nel ASA to provide the electrolysis and fueling equipment, and it reconfirmed recently it’s seeking partners for construction and operation of the stations themselves. Executives said during Nikola’s Aug. 4 earnings call they will announce a partner this year. Production of the fuel-cell semi trucks is slated to start in 2023 at Nikola’s Coolidge, Arizona, plant, which is under construction.

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