As alternative-fuel vehicles increase in popularity among consumers and investors alike, it appears that North American car manufacturers are beginning to take notice. On Tuesday morning, General Motors (NYSE: GM) announced it has taken a $2 billion equity stake in Nikola Corp (NASDAQ: NKLA), which will see the latter company’s electric pickup model make it to mass production.
Prior to the partnership, Nikola, which focuses on designing EV and hydrogen semi trucks, was not generating any revenue nor did it produce any vehicles that were salable. However, as a means of gaining more exposure to the green energy market, GM decided to purchase a stake in the relatively unfamiliar company with the plans of bringing Nikola’s Badger electric pickup truck to life.
According to the latest news release, GM will now have an 11% stake in Nikola via in-kind contributions and will also hold the right to nominate a director for the company’s board. Production of the Badger pickup truck is slated to begin at the 2022. The new partnership will allow Nikola to gain meaningful exposure to the industry, while GM expands its horizons into the alternative fuel vehicles.
The partnership announcement has caused Nikola’s stock to increase by nearly 30%, and is currently sitting at $44.64. In the meantime, GM stock also rose by more than 7%, settling in at $31.48 this morning.
Information for this briefing was found via General Motors and Nikola. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.