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Both companies’ shares jumped on with the announcement. Nikola was trading up 45% and GM was up 11% in pre-market trading.

The deal also will net GM a $2 billion stake in Nikola, which was looking like the hottest vehicle start-up since Tesla. GM will also gain one seat on Nikola’s board of directors in exchange for “in-kind services”.

Hindenburg Research report alleges fraud

On September 10, Hindenburg Research released its report filled with allegations of fraud and deception by Nikola.

Among other things, it says, in 2016 when the Nikola One truck was first displayed it wasn’t functional. Far from having a working power system, it was secretly powered by an extension cord from up under a stage.

The research firm also alleged that in January 2018, Nikola employees, directed by Milton, manufactured the illusion that the Nikola One was functional using creative video work and downhill on a stretch of road in Grantsville, Utah.

Nikola built its reputation on being the first hydrogen-powered vehicles. The Hindenburg report stated that Nikola is another case of smoke-and-mirrors. The research firm claimed that all of Milton's public statements that his company has built a state of the art hydrogen processing plant were blatantly false.

For example in December 2019 at Nikola World, Milton claimed on video that they were already producing 1,000 kilograms of hydrogen a day at their Phoenix headquarters. 

One of the keys to Nikola's success so far is that they supposedly figured out how to cut the cost of hydrogen fuel from the current market price of $16 per kilogram to below $4 per kilogram. Again, Hindenburg Research claimed there have been no breakthroughs in hydrogen, no hydrogen produced by Nikola, and most certainly no vehicle that is running on any kind of hydrogen fuel.

The report outlined in devastating detail years of exaggerations, misstatements, and falsehoods coming out of Nikola’s corporate offices. The research firm alleged that Milton is nothing short of a conman. And all the major roles in the company are filled by employees who have no experience or background that would enable them to successfully do their jobs.

Keep in mind that Hindenburg Research has a financial motive. It is a well-known short-seller and has a “short” position in Nikola’s stock. If it will successfully discredit the company, it will make a lot of money. Nikola will lose dramatically. 

Also, keep in mind that Nikola does have a working prototype--its newer Nikola Two truck. The company has several videos of outsiders being given test rides around a parking lot.

Nikola, GM statements 

GM CEO Mary Barra, who announced the joint venture with Nikola last week, reassured shareholders that they performed a “thorough review of business, legal and technical matters” before they signed the deal.