Nikola Tumbles After Losing Electric Garbage Truck Order
(Bloomberg) -- Nikola Corp. slumped after losing an order to supply sanitation heavyweight Republic Services Inc. with 2,500 battery-electric garbage trucks, the latest setback for the troubled startup.
The order was terminated because of longer-than-expected development time and unexpected costs, the electric-truck maker said in a statement Wednesday. The companies in August announced what they described as a binding contract, under which Republic would buy as many as 5,000 vehicles.
Nikola pared a drop of as much as 11% to trade down 8.7% to $15.36 as of 10:35 a.m. in New York. Republic was little changed at $95.66.
“This was the right decision for both companies, given the resources and investments required,” Mark Russell, Nikola’s chief executive officer, said in a statement.
Republic Services said the termination of the deal wouldn’t impact a commitment to electrify its fleet. “We continue to believe that electrification is the future,” it said in a statement noting its ongoing collaboration with truckmakers Volvo AB and Paccar Inc.
The cancellation is a “gut punch” for bullish investors, Dan Ives, an analyst at Wedbush Securities with an “underperform” rating on the stock, wrote in a research note. “The company still has a Kilimanjaro like uphill climb to gain back Street credibility heading into 2021 with today’s news viewed as another step backwards.”
The scrapped order follows a decision by General Motors Co. last month to downgrade its partnership with Nikola after the startup was accused of deception after the pair had announced plans to collaborate in September. Nikola has denied misleading investors.
Nikola’s stock has tumbled in the wake of the accusations made in a short-seller report that the startup had overstated its capabilities. The company has abandoned plans to make a battery-electric pickup and has yet to announce a promised partner for an ambitious hydrogen fueling-station network it expects to break ground on next year.
Nikola on Wednesday confirmed plans to start U.S. deliveries of its first electric semi-truck in 2021 and begin local production two years later at a plant under construction in Arizona. Nikola had said it planned to build the garbage trucks for Republic at that factory and would sell them for less than $500,000 each, though terms weren’t disclosed.
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