Nikola has $ 900 million in the bank, he lost $ 117 million last quarter

Electric truck maker Nikola was widely ridiculed in September when a short-selling company revealed that its first truck, the Nikola One, never worked. A promotional video of the “moving” truck actually showed the vehicle rolling down a hill.

But the company’s latest quarterly financial results, released Monday, show Nikola has something she didn’t have in 2016: trucks loaded with cash. Specifically, Nikola has $ 900 million in the bank, most of it raised when the company went public in June.

Nikola claims he spent $ 117 million in the third quarter of 2020 without generating any revenue. Losses were lower than expected by some analysts and investors reacted positively to the results, causing Nikola’s share price to rise 2% in after-hour trading.

Nikola’s war chest means that despite the company’s chaotic origins, Nikola may still have a chance to become a viable truck manufacturer. The company’s liquidity is expected to last around two years at the current burn rate. So Nikola has until 2022 to start generating revenue or raising more money from investors.

Nikola gives the badger a cold shoulder

Under the leadership of Nikola founder Trevor Milton, Nikola was looking to launch several products at the same time. But while $ 900 million is a lot of money by most standards, it’s probably not enough money to bring more vehicles to market. Milton resigned in disgrace in September and the company appears to have narrowed its target since then.

Nikola’s strategy was to partner with more experienced truck manufacturers to get help in the design and construction of his trucks. In announcing its third quarter financial results, Nikola focused on its partnership with Italian truck manufacturer Iveco to build a battery electric semi-trailer called the Nikola Tre. Nikola says he has recently completed assembly of prototype Three and plans to complete four more by the end of the year.

Nikola plans to begin production of the Tre at the Nikola plant, currently under construction in Arizona, next year. The company hopes to begin shipping the Nikola Tre “in late 2021,” according to a filing with the Securities and Exchange Commission on Monday.

Nikola says he has not yet struck a deal with General Motors that was originally supposed to close by September 30. Monday’s press release does not include any other discussion about the Badger pickup that GM was supposed to build for Nikola. This is consistent with statements made last month by Nikola CEO Mark Russell that Badger was an “interesting and exciting project” but that Nikola was “focused on heavy trucks and hydrogen infrastructure.”

At this point, I wouldn’t be surprised if Nikola simply let his deal with GM expire. The deal caused Nikola’s stock to surge when it was announced in September. But it would require Nikola to pay GM hundreds of millions of dollars – Nikola will likely need cash to bring the Three to market.

Hydrogen is still a few years away

Nikola’s third major product is expected to be a hydrogen fuel cell vehicle called the Nikola Two. GM was supposed to supply Nikola with hydrogen fuel cells, so Nikola would have a problem if the deal failed. But Nikola Two won’t come out until the end of 2023, giving Nikola plenty of time to develop the necessary technology or to acquire it from another partner.

It is also possible that Nikola’s hydrogen transport business will fail. Nikola reportedly struggled to find a partner for a planned network of hydrogen filling stations. Under Trevor Milton, Nikola claimed to have figured out how to make significantly cheaper hydrogen fuel, but details on this were not available. If the hydrogen trucking business proves ineffective, Nikola may be able to resort to selling battery electric trucks.

The biggest problem for Nikola is that paying other companies to build trucks is not likely to be a very profitable business model in the long run. It is unclear whether Nikola has developed a significant technology of its own or will succeed in doing so in the next couple of years. But with $ 900 million in the bank and a more realistic schedule, Nikola at least has a chance to develop into the viable electric truck company he claims to be since 2016.