The company Nikola Corp. filed for bankruptcy, ending a prolonged decline for the electric vehicle manufacturer that struggled with low sales and frequent changes in executive leadership following a fraud scandal. The company is considering selling its assets after seeking Chapter 11 protection in Delaware.
"Nikola Corp. filed for bankruptcy after a long period of financial difficulties," said a company spokesperson. The company recalled its battery electric trucks after facing issues with battery fires in 2023, resulting in a temporary suspension of sales. Nikola's market value reached a peak of $29 billion but had significantly fallen to less than $100 million before bankruptcy.
The electric vehicle industry has been facing challenges due to high costs, limited charging infrastructure, and a lack of consumer interest, leading companies like Fisker Inc. and Canoo Inc. to file for bankruptcy. Nikola, which went public in 2020 through a reverse merger, joins the list of manufacturers that have struggled in this sector.
"Nikola is seeking approval to conduct an auction and sale process for its assets," the company stated in a release. The company set a deadline to reach an agreement with an initial bidder and plans a sale hearing later. In court documents, Nikola revealed total debt of $98 million among financing and lease obligations.
Nikola's bankruptcy filing ends its financial troubles, which included a cash decline, low sales, and a drop in its stock price. The company was exploring options to raise capital as shares experienced a sharp decline. Hiring the firm Houlihan Lokey in October to conduct a sale process was part of efforts to find a solution.
Amid a challenging environment for electric vehicles, Nikola faced allegations of exaggeration by its founder, Trevor Milton, resulting in his ousting and fraud charges. Despite attempts to raise funds and find buyers, the company has decided to seek Chapter 11 protection to address its financial difficulties and redirect its operations.