Nikola Corp. is telling customers it will replace the battery packs in its electric trucks, a worst-case scenario following several fires. Nikola is bringing all the trucks back to its Arizona plant but won’t say where or when it will get pack replacements.
In most recalls, the supplier of the part or component involved bears at least some of the cost of the campaign. In Nikola’s case, it owned its since-liquidated former supplier, Romeo Power Inc. It is therefore on the hook for the full cost of the recall.
The recall cost is unknown, but Nikola appears to have accelerated the sale of newly authorized shares to raise money to pay for it. The company declined to answer questions from FreightWaves. It said the recall issue would be covered in its third-quarter earnings call scheduled for Nov. 2.
Romeo Power purchase results in multiple setbacks
Niklola purchased Romeo in August 2022 as a hedge against the pack maker running out of money and halting supplies. The acquisition has brought a series of headaches:
Romeo had been discounting the price it charged Nikola by $110,000 per battery pack. Nikola had to absorb that cost once it owned Romeo’s technology.
Nikola canceled contracts to supply packs to electric truck startups eLightning Motors and Lion Electric Co. Lion sued Nikola in March.
Pack manufacturing deficiencies led Nikola to recall 209 model year 2022-2023 Tre battery-electric vehicles (BEVs) in August. That followed two underhood fires initially traced to coolant leaks in the battery packs. At least two more fires were reported after the recall.
Nikola in July decided to liquidate Romeo’s assets for which it paid $144 million in stock. Mullen Automotive Inc. purchased the assets in September for $3.5 million
After initially telling owners the Tre BEVs were safe to drive with certain precautions, Nikola on Oct. 11 said it would pay to bring the trucks back to Coolidge, Arizona, where battery packs would be replaced. The letter said the replacements would take about 60 days depending on when pack replacements become available.
Nikola uses a different pack configuration from Proterra Inc. in its hydrogen-powered Tre fuel cell electric vehicles (FCEVs) now in production. Proterra continues to make and supply battery packs while in bankruptcy reorganization. It is unclear where Nikola will get packs to replace the defective Romeo battery packs. The FCEV uses two battery packs. The Tre BEV uses nine.
Truck-as-a-service startup WattEV ‘couldn’t take the chance’
WattEV, a truck-as-a-service startup using 14 Tre BEVs in its operation in California, reluctantly sent its trucks back to Nikola.
“We couldn’t take the chance,” CEO Salim Youssefzadeh told FreightWaves. “We’re not getting any information on when we’ll get the trucks back.”
WattEV is also waiting for more than 80 VNR Electric trucks ordered from Volvo Truck North America. Volvo recalled 173 VNR electric trucks in early August to replace the battery packs following a non-spreading fire inside one pack. Pack supplier Akasol is expected to pay for some of the recall expense.
WattEV has turned to the Freightliner eCascadia from Daimler Truck as a solution, acquiring five trucks so far, Youssefzadeh said.
Nikola accelerates stock sales
Nikola has accelerated the sale of new stock since receiving shareholder authorization to double the number of authorized shares to 1.6 billion on Aug. 3. It has issued $165 million in convertible notes as well as issuing shares to cover debt held by hedge fund Antara Capital.
Between Aug. 1 and Sept. 20, the number of outstanding shares increased by more than 26% to approximately 985 million, according to a post by Henrik Alex on the investor site Seeking Alpha.
Company shares traded 8.4% lower at $1.04 premarket Thursday, continuing a downward trend that began Oct. 11 when the price was $1.41.
Related articles:
Nikola will recall 209 battery-electric trucks following 2 fires
Nikola moves to liquidate battery pack maker Romeo Power
Stock slides into reverse after Nikola share count doubled
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