General Motors said Tuesday it is taking an 11% stake in electric vehicle startup Nikola in a move to commercialize its Ultium all-electric battery system and hydrogen fuel cell technology.
Under the terms of the deal, GM will receive $2 billion in Nikola stock in return for providing Nikola with in-kind services and access to GM parts and components.
Nikola’s Badger pickup truck will be manufactured by GM in both battery and fuel cell electric vehicle variants, with Nikola being responsible for sales and marketing. The startup is also developing fuel cell-powered big rig trucks.
“This strategic partnership with Nikola, an industry leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems,” GM CEO Mary Barra said in a news release.
“Applying General Motors’ electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future,” she added.
Barra did not say where the Badger would be built but CNBC suggested the most logical location would be GM’s Hamtramck plant in Detroit where the Hummer EV will be built.
By teaming up with GM, Nikola saves the billions of dollars it would have needed to set up a manufacturing plant. It will also be able to tap GM’s deep expertise in EV technology and vehicle manufacturing.
In trading Tuesday, Nikola shares jumped 39.4% to $49.63.
For GM, The Wall Street Journal said, the deal “gives the century-old auto maker another electric product to add to its lineup as well as a valuable equity stake in a startup company.” GM is in the midst of a $20 billion pivot to an “all-electric future” that includes the development of the Ultium battery platform.
But although GM shares rose 8.5% to $32.55, Electrek questioned the rationale for the deal, saying GM “is going to lose important resources … that they could have spent on building and marketing their own electric vehicles.”
“They now own 11% of a controversial and polarizing brand they could have built themselves for much less money,” the publication said.