Nikola internal review finds several of founder’s claims ‘inaccurate’

A number of claims made by Nikola’s departed founder about the state of the company’s technology and products were inaccurate, according to its own internal review.

The electric truck start-up foundered last year after short seller Hindenburg Research accused Nikola of being “an intricate fraud”, largely based on statements from colourful founder Trevor Milton — a characterisation it continues to dispute.

Following Hindenburg’s report, Nikola hired Chicago law firm Kirkland & Ellis to investigate internally. The firm found that nine statements made by Milton were wholly or partly inaccurate when he made them, Nikola said on Thursday.

The list includes Milton’s claims in 2016 that Nikola had engineered a zero-emissions truck and in 2019 that it could produce cheap hydrogen, as well as a notorious 2017 video that seemingly shows a Nikola truck “in motion”, when it was actually rolling downhill.

But Nikola said in a Securities and Exchange Commission filing that Hindenburg’s claims were “in other respects . . . inaccurate”. The automotive consultants Kirkland hired as part of the review found that Nikola’s technical and engineering leads were experienced and the company’s “technological contributions and development are consistent with other [original equipment manufacturers] at similar stages of development”.

“These findings are inconsistent with the main conclusion of the Hindenburg article that the company was an ‘intricate’ or ‘massive fraud’,” the company said.

Nikola said in the filing that Kirkland had not determined whether the inaccurate statements broke the law and was still analysing whether they were intentional or material. It added that the law firm “continues to assess the accuracy of other statements made by the company, including in its current SEC filings”.

The US Department of Justice and the SEC have both launched investigations into the Arizona company following the short seller’s report. Nikola said on Thursday that it was facing nine lawsuits, six of which had been combined in a single class-action.

So far Nikola has advanced $8.1m for Milton’s legal fees, under an indemnification agreement he has with the company.

Milton stood down as executive chairman in September and the company has been pulling back from some peripheral activities. It said on Thursday it was taking a more than $14m charge to shut down its PowerSports division, which builds all terrain vehicles and watercraft.

A partnership with General Motors has already been downgraded to a supplier agreement, although Mark Russell, chief executive, said on Thursday the revised agreement “made much more sense for both of us”. Plans for GM to build a Badger pick-up truck for Nikola have also been scrapped, as was a deal with Republic Services to develop a new garbage truck.

The company’s stock is a shadow of its peak. The shares closed at $19.72 on Thursday, 75 per cent lower than in June. It reported a fourth-quarter net loss of $147m, compared to a $26m net loss the year before.