EV Startup Nikola’s stock plummets 38% after bankruptcy filing

Nikola Corporation (Nasdaq: NKLA), a once-promising electric vehicle startup, filed for Chapter 11 bankruptcy protection Wednesday after failing to secure a buyer or raise additional funds to sustain operations. The Phoenix-based company, known for its hydrogen and battery-electric trucks, announced that it will pursue a structured sale of its assets under Section 363 of the U.S. Bankruptcy Code.

Nikola enters Chapter 11 with approximately $47 million in cash to fund ongoing activities, including the sale process and an orderly wind-down of its business. The company has filed customary “first day” motions to ensure limited operations can continue, including employee obligations and certain HYLA fueling operations through March 2025. However, the long-term future of its service network and fueling infrastructure depends on securing new partners.

Not enough

“With the dedication of our employees and support from our partners, Nikola has taken significant steps to move zero-emissions transportation forward, including bringing the first commercially available Class 8 hydrogen fuel cell electric trucks to market in North America and developing the HYLA hydrogen refueling highway,” said Nikola President and CEO Steve Girsky. “Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the Company and its stakeholders.”

The company’s collapse follows years of financial and legal troubles. Founder and former CEO Trevor Milton was convicted of securities and wire fraud in 2022 for misleading investors about Nikola’s technology. Production of its core products—battery-electric and hydrogen fuel cell semi-trucks—began in 2022, but only 600 units had been produced by late 2024. Recalls and manufacturing issues further drained its resources.

Failed Expectations

Adding to its difficulties, Nikola has faced an increasingly uncertain regulatory landscape. The suspension of the National Electric Vehicle Infrastructure (NEVI) program—a federal initiative designed to subsidize EV charging infrastructure—has raised concerns about the long-term viability of hydrogen and battery-electric trucking. Additionally, proposed rollbacks on EV tax credits have introduced further instability, potentially dampening demand for zero-emissions commercial vehicles.

Despite months of seeking alternatives, Nikola determined that a structured sale process was the best way to maximize the value of its assets. The proposed bidding procedures, pending court approval, will allow interested parties—including strategic and financial buyers—to submit binding offers.

Girsky had previously stated in October that Nikola was “actively talking to lots of potential different partners who value what we do and value what we’ve built.” However, despite its efforts to secure financing, the company warned investors in late 2024 that it lacked the capital to continue operations beyond early 2025.

Nikola’s stock, which once peaked at around $80 per share in 2020, is now trading for under $0.50 per share, reflecting the company’s significant financial struggles. As of February 2025, the stock price is approximately $0.46 per share. The company now joins a growing list of EV startups that failed to meet initial expectations, underscoring the sector’s financial volatility and dependence on shifting regulatory policies.