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Nikola (NASDAQ: NKLA) and General Motors Company (NYSE: GM) have extended negotiations of their manufacturing partnership as the electric vehicle (EV) manufacturer and its founder Trevor Milton continues to face controversies. 

While Nikola and GM are negotiating, two women filed separate police reports accusing Trevor Milton of sexual assault. The GM-Nikola deal did not close on Wednesday, which was the initial target.

The companies announced the deal on September 8. At the time, GM was agreeing to an 11%  equity stake in Nikola, which would have been worth about $2 billion. But two days later, after the Hindenburg short-seller report was published with fraud accusations pointed at Nikola, the stock collapsed. NKLA was trading $18 a share, GM’s potential stake was worth substantially less than a few days before. 

The Securities and Exchange Commission (SEC) and the Department of Justice  (DO) investigations are underway. Trevor Milton stepped out of the company in the midst of the swirling controversy.

Before the initial negotiations were disrupted with the release of the Hindenburg report, the two companies had a deal.

Nikola and GM continue to negotiate

The GM-Nikola alliance was anchored with plans for Detroit-based vehicle manufacturer to build the EV manufacturer's Badger pickup, chassis architecture for the vehicle, and supply electric batteries. 

GM also committed to constructing the factory to build the Badger pickup and to manufacture the fuel cell system for future Nikola heavy cyber trucks.

As a deal “incentive” GM would keep 80% of EV regulatory credits generated by the Badger pickup.

GM also retains the right to buy the remaining 20% of the EVs at market rates, which would help GM offset sales of its gasoline-powered vehicles.

EV Credits make a difference in the deal

To put it in perspective, EV credits can make a big difference in profitability. Tesla has been an innovator in using the EV credits.

Last quarter, EV credits helped Tesla to earn $428 million, a company record, and a 64 percent increase compared to last year.

In California, the Zero Emissions Vehicle (ZEV) program gives out EV credits to automakers that make and sell electric vehicles. There are 14 other states in the U.S. that award EV credits through similar programs.

Tesla has a history of amassing EV regulatory credits from various sources around the world. These credits are given to automakers based sometimes on the number of electric vehicles sold. And sometimes they are based on emissions that come from the vehicles sold.

EV manufacturer circles the wagons

When Nikola CEO Trevor Milton had to step down, Steve Girsky, replaced him. Girsky, co-founder and board member of VectoIQ, is also the former GM Vice Chairman. It was VectoIQ that took Nikola public earlier this year through a reverse merger.

GM was introduced to Nikola through Steve Girsky, and Mary Chan, managing partners of VectoIQ, LLC. Both worked for GM at the top, before they formed VectoIQ.

On Wednesday, the EV manufacturer canceled its product showcase scheduled for December, citing coronavirus concerns. 

Girsky and Nikola CEO Mark Russell attempted to calm investors by assuring them that the company’s production timelines and factory construction remain on schedule. Girsky said the company's Board remains “very supportive” of Russell and the Nikola team.

In the meantime, there are reports that Nikola is targeting its critics. The EV manufacturer is accused of trying to scrub the internet of the evidence that can back up the Hindenburg Report. 

On YouTube, a number of videos are being taken down. Nikola is claiming their promotional videos and press release videos are copyrighted. Some of the video disappearings include the infamous clip of Nikola One rolling down a hill.

"Our transaction with Nikola has not closed," a GM spokesperson said late Monday. "We are continuing our discussions with Nikola and will provide further updates when appropriate or required."

If the proposed partnership agreement doesn’t close by Dec. 3, it can be terminated by either party. NKLA stock has lost nearly two-thirds of its value since the GM deal was announced. GM lost 2.4%.

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