Troubled EV maker Nikola (NASDAQ: NKLA) has filed for Chapter 11 bankruptcy protection. The Phoenix-based company’s decision follows unsuccessful attempts to secure a buyer or the funding necessary to sustain operations.
In its heyday, Nikola reached a market valuation that briefly surpassed Ford, struck a multibillion-dollar partnership with General Motors, and served as the poster child for ambitious automotive firms going public through SPACs.
That lofty standing eroded quickly when scandal enveloped the company’s founder and former CEO Trevor Milton, who was convicted of securities and wire fraud in 2022. Prosecutors proved he misled investors about Nikola’s technological capabilities, including overstated progress on its hydrogen-powered trucks and battery systems.
READ: Nikola Founder Trevor Milton Gets 4 Years for Deceiving Investors
Milton’s downfall was triggered in part by a short-seller report from Hindenburg Research, which alleged that he and the company exaggerated the functionality of prototype vehicles, sparking a federal investigation that ultimately revealed a pattern of deception.
Despite the founder’s exit and legal battles, Nikola moved ahead with its lineup of all-electric and fuel cell electric trucks, beginning small-scale production in 2022. However, the effort proved unsustainable. Recalls due to various defects impacted dozens of trucks, driving up costs and aggravating already strained finances.
The company warned during its third-quarter earnings call last year that it lacked enough cash to continue operating beyond the first quarter of 2025. Nikola indicated it had only about $198 million in available funds.
Steve Girsky, who took over as CEO in 2023 after serving as a Nikola board member and orchestrating the company’s public listing through a SPAC, strove but failed to forge new partnerships and fresh investments to keep Nikola solvent.
Milton is anticipated to serve roughly one year in federal prison, factoring in credits earned through the First Step Act and other Bureau of Prisons programs. In 2025, following the closure of Hindenburg Research after years of controversial short-selling campaigns, Milton condemned the firm’s influence on companies like Nikola, arguing that its reports had the power to dismantle businesses regardless of their accuracy.
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