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Nikola CEO Mark Russell downplayed the company's Badger pickup truck in comments to the Financial Times on Thursday.
“The Badger was an interesting and exciting project to some shareholders, but our institutional shareholders are mostly focused on the business plan,” Russell said. “Our core business plan since before we became publicly listed always focused on heavy trucks and hydrogen infrastructure.”
Russell's comments were published after markets closed on Thursday. Nikola's stock price plunged on Friday morning and is currently down about 14 percent for the day.
Negotiations with General Motors to design and build the truck have dragged on weeks longer than expected. Nikola and GM announced a wide-ranging partnership on September 8. It envisioned GM not only building the Badger but also supplying the batteries and fuel cells that power the trucks. Under the deal, GM would also supply hydrogen fuel-cell technology for Nikola's semi trucks outside the European market.
The value of Nikola's stock soared immediately after the September 8 announcement, but it then tanked after a short-selling firm revealed that Nikola CEO Trevor Milton had lied when he said Nikola's first truck, the Nikola One, was fully functional. Nikola has admitted that a promotional video showed the truck rolling down a hill, not traveling under its own power. The price decline has made GM's expected $2 billion stake in Nikola worth much less.
Russell is correct to note that Nikola's focus since 2016 has been on building hydrogen-powered trucks. Nikola is hoping to do for hydrogen what Tesla has done for batteries, building a network of hydrogen fueling stations that enable long-haul trucking using hydrogen fuel cells. Rather than selling trucks outright, Nikola envisions leasing them to customers on a per-mile basis, with maintenance and fuel included.
But there are big open questions about this plan. Nikola has been struggling to recruit a partner to build and run its hydrogen stations. It's also not clear whether Nikola can reduce the cost of hydrogen enough to make its trucks cost-competitive. Currently, hydrogen is far more expensive, given its energy density, than fossil fuels.
The larger question is whether Nikola is adding any value as it hires other companies to build trucks, operate its fuel stations, and perform other work on its behalf. Merely re-selling other companies' technologies is not likely to be a path to profitability. Nikola has long claimed to have advanced technology ranging from batteries to hydrogen fuel cells, but details have been sparse.