Nikola Inc. founder Trevor Milton resigned as executive chairman and a member of the board of the hydrogen fuel cell and electric truck developer amid allegations of fraud and a Securities and Exchange Commission probe into whether the company had made false statements to investors.
Stephen Girsky, a former General Motors executive who helped take Nikola public in a recent reverse merger, will step in. Girsky already is a board member.
Milton has denied the allegations, which were detailed in an investment report from Hindenburg Research earlier this month. He said he decided to step aside voluntarily.
Hindenburg is an investment firm that specializes in so-called short selling. It borrows shares in a company and sells them, with the intent of being able to purchase the shares at a lower price before it has to settle the loan. Short sellers thrive on negative news and financial missteps by public companies.
“On September 11, Nikola’s legal counsel proactively contacted and briefed the U.S. Securities and Exchange Commission (regarding Nikola’s concerns pertaining to the Hindenburg report. Nikola welcomes the SEC’s involvement in this matter,” the company said in a statement.
However, the company did concede that in a 2017 promotional video, the Nikola One fuel cell prototype truck was actually rolling down a slight hill rather than operating on its own power.
“We’ve built a deep bench of talent over the years, and I am confident that Nikola’s Chief Executive Officer, Mark Russell, supported by Chief Financial Officer, Kim Brady, and the rest of the leadership team will advance our goal of making Nikola the global leader in zero-emissions transportation,” Milton said in a statement.
Analysts at J.P. Morgan said in a note to investors that Milton’s resignation is a positive for the company.
“This will minimize the drama in the weeks and months ahead as the company moves forward with the development of its all-electric and fuel cell Class 8 trucks and related infrastructure as well as works to close the deal with General Motors,” the investment bank said.
It also said a transition to seasoned executives “will set a more measured and less promotional tone with investors.”
Earlier this month, General Motors said it will take a large stake in Nikola and they will work together to bring Nikola’s Badger fuel cell and electric pickup truck and other projects to market.
Nikola, based in Phoenix, Ariz., will exchange $2 billion in newly issued common stock for the in-kind services and access to GM components and technology. GM will engineer and manufacture the Badger pickup. It will take an 11 percent stake in Nikola and gain a seat on the company’s board of directors. GM said it stands behind the due diligence conducted prior to signing the Nikola contract.
Other Nikola initiatives are still on track, according to a statement by the startup.
The Company said it expects the Nikola Tre semi-truck, a battery-electric semi-truck created in collaboration with IVECO, a major European truck manufacturer, to be ready for production and available to customers by the fourth quarter of 2021. The Nikola Tre will have a 300-mile range.
Sometime next year, Nikola will begin testing a pre-production Nikola Two, a hydrogen-electric powered semi-truck for the medium and long-haul trucking sectors, the company said. It will have more than 1,000 horsepower and 2,000 pound-feet of torque. Anheuser Busch previously announced an order for up to 800 trucks. The prototype is to be delivered by the end of 2021, testing planned for 2022, and a production version expected in the second half of 2023, the company said.