Nikola Founder Resigns As Chairman After Denying Fraud Allegations
Trevor Milton, the founder of Nikola, has stepped away from his hydrogen fuel cell vehicle start-up after he was accused of fraudulently exaggerating the viability of some of his company's technology.
Milton, who denies the allegations, says he resigned his
position as executive chairman of Nikola's Board of Directors because "the
focus should be on the Company ... not me." He said he intends to defend
himself against "false accusations."
The news comes just weeks after Nikola struck a major deal
with GM to build an electric pick-up truck. Those plans are still moving
forward.
The start-up, founded in 2014, was named after Nikola Tesla
and aimed to revolutionize the transportation sector through cutting-edge
zero-emissions technology.
That might sound familiar — Milton clearly hoped that his
company would follow in the footsteps of another start-up named after the famed
inventor in confounding skeptics, delighting investors and achieving runaway
success.
Like Tesla CEO Elon Musk, Milton had a vision: in his case,
of fuel-cell powered big rigs transforming the shipping industry. But did he
have the technology to make that vision real? And until the technology is
proven, where's the line between optimistic hype and deception?
Bloomberg reported that Milton had previously exaggerated
the functionality of Nikola tractor trailers. This month a short seller,
Hindenburg Research, went further, calling Nikola "an intricate fraud
built on dozens of lies" and accusing Milton of misleading partners,
investors and customers by, among other things, pretending that non-functioning
prototypes were actually viable products.
As a short seller, Hindenburg Research stands to profit if
Nikola stock plummets. The company says the allegations are false and
misleading.
In one eye-catching allegation, Hindenburg says that a video
that appeared to show a Nikola big rig driving actually showed it rolling down
a large hill. Nikola did not deny that the truck in the video was rolling
downhill. However, it maintains that Nikola has since created "real
working hydrogen fuel-cell powered semi trucks."
This summer Nikola had a splashy debut on the stock market
in June, thanks in part to its announcement of an electric pick-up truck — a
big departure from its focus on semis, but one that was popular with investors.
The stock had rocky performance after that, but got a boost
this month after GM announced it would build that pick-up truck, called the
Badger, using GM batteries and fuel cells. Nikola would handle marketing and
sales.
GM says it will "work with Nikola to close the
transaction" move forward with those plans, despite Milton's departure.
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