Nikola Founder Leaves Company Due to Fraud AllegationsSeptember 27, 2020
Nikola Motor founder Trevor Milton announced that he is stepping down as chairman of the board of directors and leaving the board of directors. Milton wrote about this on Twitter. The reason for leaving was allegations of fraud after the release of a report by the analytical company Hindenburg Research, which presented numerous cases of deception of partners and investors by Milton. He himself continues to deny the accusations, but decided to resign in order to deflect the blow from the company and its partners.
The new chairman of the board of directors of Nikola Motor has been appointed Stephen Girsky, a former vice chairman of General Motors, which previously announced a partnership with the startup and became part of its investors, having bought 11% of the company. This deal became the reason that GM shares are now falling along with Nikola – quotations fell on September 21 by 4%. Nikola shares have fallen from their peak indicators in recent weeks by almost 3 times, and only at the opening of trading on Monday by almost 30%.
Nikola Motor has confirmed Trevor Milton’s resignation in a press release.
Milton’s resignation follows a high-profile scandal, which was caused by a report from the analytical company Hindenburg Research. According to the report, Nikola’s management misled partners and investors. “Trevor Milton turned the lie into a $ 20 billion public company,” Hindenburg Research told Nikola.
Hindenburg Research found that Nikola featured a hydrogen-powered truck in an ad in 2018, when in fact it was towed up a hill and coasted down a hill. Nikola’s claims that the startup was able to drastically reduce the cost of generating hydrogen, according to Hindenburg Research, are also not true.
A few days after the report appeared (it came out on September 10), Nikola admitted that the truck was idling. After that, the company’s shares fell, and Milton’s resignation was a matter of time.
The report also said that the revolutionary battery technology that Nikola promised to acquire from an unknown company never existed. Experts also questioned the reality of large pre-orders for Nikola trucks and independent development of key parts.
All these accusations remain essentially unanswered.
“The focus should be on the company and its mission to change the world, not me. So I made the decision to go to the board of directors and voluntarily step down as executive chairman. It was an incredible honor to found and transform Nikola into a company that is transforming transportation and helping to protect the climate of our planet, ”Milton wrote on his Twitter page. And he promised to defend his reputation, if necessary, in court.
Meanwhile, the accusations by Hindenburg Research have become the subject of an investigation by the US Securities and Exchange Commission and, according to unconfirmed reports, the US Department of Justice, Bloomberg reported. If the allegations from the report are confirmed, Milton will face arrest and trial. So far, the beginning of the story is very similar to how the events developed around another scandalous startup – Theranos and its founder Elizabeth Holmes, when it turned out that all her promises were lies and no unique technology of blood analysis was created by her.
Nikola has announced three models of electric trucks (One, Two, Tre), a Reckless SUV and a Badger pickup, but so far not a single vehicle has left its conveyors. Serial production of electric vehicles should begin in 2021. The pickup truck has the greatest chances of getting to the market – General Motors itself will be engaged in its production. This was announced in early September, when it became known that GM would receive 11% of the startup in exchange for its manufacturing resources and technologies. The deal could now also be called into question if it turns out that Milton and GM have misled the real assets of their company.
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