Hydrogen truck maker Nikola Motors still battling to survive after its accumulated losses grow to $2.4bn

Shares in US manufacturer nosedive as CEO steps down and shareholders agree to dilute stock

Hydrogen and battery-electric truck manufacturer Nikola has posted a net loss of more than $217m for the second quarter of this year — almost 26% further in the red than the same period last year.

In a filing to the US Securities and Exchange Commission (SEC), it admits that its accumulated losses since start-up have now reached $2.4bn, with continuing doubts over whether the company can remain a going concern over the next 12 months.

“We believe that we will continue to incur operating and net losses each quarter until at least the time we begin to generate significant margin from our trucks, which may not happen,” the company notes in its filing, which is dated 4 August.

“We have determined... there is a substantial doubt that we will have sufficient funds to satisfy our obligations through the next twelve months from the date of issuance of this Quarterly Report.”

It continues: “Our ability to continue as a going concern is dependent on our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from the ordinary course of business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time.

“If we are unable to raise sufficient capital when needed, our business, financial condition and results of operations will be materially and adversely affected, and we will need to significantly modify or terminate our operations and our planned business activities.”

In February, Nikola had told the SEC that its deficit was $2bn, with a similar warning that it may collapse within a year.

At that time, the then CEO, Kim Brady, who has since retired, declared that the warnings in the February filing reflected the opinions of its auditor, Ernst & Young, and that the company fundamentally disagreed with its assessments, stating that it was merely “accounting language” unreflective of reality.

Nikola declared in its new filing that it would push cash spend below $400m this year and streamline its operations with a focus on selling trucks in North America, slashing jobs, exiting a European joint venture with Iveco and offloading its Phoenix Hydrogen Hub to Fortescue in the process.

And while the company’s spend on operating activities and purchase of new properties, plants and equipment for the first half of 2023 has reached nearly $375m, this started to decline in Q2.

Nikola only spent $148m on these activities, around 17% less than the $179m spent in the second quarter of 2022.

However, the firm has also seen its long-term debt and finance lease liabilities increase from $290m at the end of 2022 to $348m at the end of June.

At the end of last month, the company started serial production of its hydrogen fuel-cell truck, with first deliveries planned for September.

But while Nikola has racked up orders for more than 200 hydrogen fuel-cell trucks from 18 customers, many of these are still subject to an actual purchase agreement being signed before this revenue can be recognised.

As such, the company’s net loss for the second quarter of this year was $217m, compared to a net loss of nearly $173m in Q2 the previous year.

Stock dilution and CEO stepping down
Nikola’s shareholder meeting at the end of the quarter approved a proposal to increase the authorised number of shares through a $100m common stock offering — a measure that had been introduced in an effort to raise capital for the struggling vehicle manufacturer.

The company had previously adjourned a vote on this proposal twice, as it lacked the votes to pass the measure.

While share price closed at $3.395 on 3 August — the highest since November 2022 — this dropped to $2.50 the next day following the release of Q2 results and the passage of the share dilution proposal.

Nikola’s CEO Michael Lohscheller also announced on 4 August that he would to step down at the end of the month for family reasons, and will be replaced by Steve Girsky, the firm’s chairman of the board since September 2020.

Girsky is the third CEO of Nikola since founder Trevor Milton, who stepped down from his role in June 2020 to become executive chairman.

Milton resigned in September that same year over allegations of fraud by short-seller Hindenburg Research, including an accusation that a promotional video of its Nikola One semi-truck apparently travelling via its own propulsion was in fact rolling down a hill.

Milton has since been convicted of one count of securities fraud and two counts of wire fraud. (Copyright)