- Back in September,
General Motors struck up a deal with EV startup, Nikola
to make and sell electric trucks.
The news threw the automotive industry through a loop.
Why the heck would such a big company like GM
partner with Nikola, a company with no track record.
The events that followed can only be described
as an absolute cluster truck (beep)
There were lies,
there were lawsuits and there was even a sex scandal.
How did such a shady company get anyone to trust them?
Why are the Feds coming after Nikolas founder
and why hasn't GM pulled out of the deal?
We're gonna find out.
(slow music)
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Let's get back to the episode.
Electric vehicles are becoming a bigger sector
of the automotive industry every year.
And in order to stay relevant in the years to come,
auto makers need to make major electric moves.
(electricity zapping)
Moves like a full-size electric truck.
The first OEM to offer an affordable,
capable and reliable pickup truck is gonna be raking it in.
So it's natural that GM would maximize efforts
to take a piece of that market.
They're one of the largest and most storied
multinational auto manufacturers in the world,
but, they're not very big on taking risks.
So in classic GM fashion, they're a little late
to begin the game.
So, before we talk about why the GM, Nikola deal
might be a huge mistake,
let's take a look at the founder of Nikola.
Possibly the biggest con man, the car world has ever seen.
Let me tell you, I've seen a lot.
Also, I wanna state for the record
that I know Nolan Sykes, do not hold any stock
in either of these companies, neither does Donut Media.
Any opinions in this video
are motivated by genuine confusion and a lot of frustration.
The man behind Nikola motor company
and the character at the center
of this future HBO documentary series
is this guy, Trevor Milton.
He's a college dropout from Utah,
and one of those guys with an overactive
entrepreneurial spirit.
Which means he probably doesn't tip servers.
Plus he's got a couple business failures under his belt.
In 2014, Milton joined the race to beat Tesla
and founded his own EV company
with a suspiciously similar name, Nikola.
(laughing) Why would you?
You can't name your company after the same guy.
(laughing) It's like starting a car company named Henry.
Anyway, Milton's mission for Nikola,
was to be a leading manufacturer of battery
and hydrogen fueled zero emission semi-trucks.
So he assembled a team with no relevant experience.
For example, his brother, Travis,
whose most recent work experience
was pouring concrete on driveways, was named,
Director of Hydrogen Production and Infrastructure.
I'm not saying pouring concrete is a bad job,
he's probably very good at it. I'm just saying,
what the hell does he know about hydrogen production?
But somehow through charisma and luck,
Trevor and his bro managed to drum up interest
in their startup.
In 2016, a mere two years after it was founded,
Nikola unveiled the Nikola One.
Their hydrogen fueled Class 8 truck,
which was projected to go into production in 2020.
And I'll admit the prototype looked pretty awesome.
And despite its lack of any proven technology,
Milton claimed over and over that the truck was quote,
"Not a pusher."
- This is not a pusher.
It's not just a pusher.
- And that it was quote, "Fully functional."
- It's a fully functioning vehicle,
which is really incredible...
- The lady doth protest too much me thinks.
Despite the weirdly defensive statements,
maker of Crispy boys, Anheuser-Busch
bought into the buzz and provisionally ordered 800 trucks.
This was a huge moment for Nikola,
as the order for this trucks place by Anheuser
generated massive interest, investment and more pre-orders.
And on June 24th of this year,
Nikolas stocks went public,
making Milton an overnight billionaire
and legitimizing Nikola as a force
in the electric truck game.
And then, something happened that no one anticipated.
On September 8th of this year,
GM announced that it'd be teaming up with Nikola
to manufacture Nikolas new electric
and hydrogen field pickup called, the Badger.
The Badger would have up to 906 horsepower
and 980 foot pounds of torque, a 600 mile range
plus insane options, like water fountains and refrigerators.
I actually do like how the thing looks.
It's got like electric Raptor vibes.
If it was real, it'd be cool.
Up until this point,
Nikola had been developing the Badger by themselves.
But, under the GM deal, they would still design and sell it
under the Nikola name,
but GM would lend the hydrogen fuel cell technology
they developed with Honda
as well as their new Ultium battery.
For providing the much needed tech and engineering,
GM would get 11% of the company in return.
That's equivalent to $2 billion in equity.
It's a lot of mulla.
But that's not all.
They would also be the sole provider of fuel cells
in all Class 7 and 8 trucks outside of Europe
for four years.
Plus, they would nominate a director to Nikolas board.
This deal was major.
And when it was announced, Nikolas stock shot up by 33%,
which I don't own any stocks,
so I don't know what that means.
I don't know if that's, that sounds big, it's a big.
At the time, it seemed like a win for everyone involved
and they all lived happily ever.
For two days.
(camera shuttering)
On September 10th, something big happened.
These guys called the Hindenburg Research Group,
released a report called quote,
"Nikola: How to Parlay An Ocean of Lies
"Into a Partnership With the Largest OEM in America".
This thing is the Hindenburg of reports,
a 67 page scathing take-down of Nikola and Trevor Milton.
It explains in great detail
how his entire career was built upon dozens of lies,
that he's somehow managed to jockey
into a $20 billion company.
But why believe these guys?
Who's to say the report isn't just a bunch of malarkey?
Well, for one thing, they had the receipts.
There were documents, emails, texts
and a long list of whistleblowers
ready to out Trevor for the liar he is.
It is juicy, it is ruthless
and it was the catalyst for this giant controversy.
Let's go over just a few of the most shocking lies
that the report uncovered.
(upbeat music)
Remember when Nikola unveiled the Nikola One,
the electric Semi that launched this company
into the billions.
Well, it never worked.
Bloomberg initially reported
that it was never even completed.
It couldn't even power itself at the unveiling.
There was a cable snaked up through the stage,
so it's lights turned on.
They had artists stencil H2 and zero emission
on the side of the truck,
even though it had zero hydrogen components on board.
Multiple whistleblowers that worked on the launch
said that they had to run to the hardware store
for loose parts during the show.
That's Donut (beep) right there.
You know what, props, shout out to Leah.
Actually, this stool's a little,
you'd like a little, Leah.
Under pressure, Milton eventually admitted
that it was never finished
but claimed that he never said it was,
but he did many times.
In another bold move of complete dishonesty.
Milton released a video
of the Nikola One quote, "In motion."
It was pretty sick, I remember watching it.
It was a zero emission Semi-truck
speeding down a highway in the desert.
But according to text messages from a former employee,
this was also a lie.
The Semi was actually towed to the top of the hill
and rolled down it like a Tonka truck.
(farting sound)
And Milton didn't just lie about the vehicles
he wasn't making.
In 2019, Trevor claimed that Nikolas' headquarters
were powered completely by 3.5 megawatt solar panels
that he had installed on the roof.
- We have 3.5 megawatts of solar up on the roof
producing about-- - However,
aerial photos show no such panels.
That's not even a good lie.
Eddie with a drone could've just prove it.
If you say, "Okay, we've got solar panels on the building."
Nobody's gonna be like, really, really.
I'm gonna go check it out.
It's more like, okay, we know this guy's a liar,
let's just see if he's lying about this stuff.
And then we find out that that's a lie.
In the same year, Nikola promised a new battery
that would revolutionize the industry,
but it turned out to be vaporware,
it was totally non-existent.
And the president of the acquiring company
had been found to use
a NASA expense account, to procure sex workers.
You got to use your money for that dude.
This year, Milton claimed that just like Tesla,
all of Nikolas components were made internally.
- [Trevor] But we do do all the E axle design in house,
all the gears, the gear reductions,
the thermal, the cooling,
even the controls that go with it.
And also the inverters as well.
- But it only takes a quick Google image search
to reveal that his inverters
are actually from a company called Cascadia,
and that he covered their logo with some electrical tape
in promotional videos.
Premiere isn't even that hard to use.
I can figure out how to do that,
you don't need to use electrical tape.
Look, that is a lot of lying
and that's not even everything.
I gave you this little bits and pieces.
Built on the lies of a poor man's Elon Musk,
a sham, just like that one lady with a deep voice,
with the blood pills.
- This is what happens when you work to change things.
- This is what happens when people think you're not
doing something and you are (crowd booing)
Of course, Trevor Milton and Nikola
did deny the allegations of fraud,
but with all of Hindenburgs receipts,
well, the damage had been done.
The department of Justice launched a federal investigation
in the Milton's lies about having technology
and misleading investors.
With the Feds on his tails for fraud,
Milton stuck his tail between his legs
and resigned as Nikolas executive chairman.
And still, for some reason,
GM stuck by their deal with Nikola.
Even as the cards kept falling
around this poor poor company.
Maybe with Milton gone,
they could help salvage the Nikola name.
After all, his replacement as executive chairman
was Stephen Girsky a former GM Vice Chairman
who just happened to be the architect of the deal with GM,
a total coincidence, I'm sure.
Maybe the whole Milton debacle
would just stay in the rear view where it belong
and damage control could commence.
But then, another bomb dropped on Nikola.
Two women, one of whom was Milton's cousin
accused Trevor of sexual assault.
Wow, if you thought this guy was bad now,
this really sends old Milton
into a deeper level of hell, okay.
Milton quotes, "Strongly denies the allegations."
But quite frankly, his track record doesn't bode well
for his credibility.
After the news broke,
GM changed their tone regarding the deal with Nikola
for the first time quoting,
"In light of recent allegations regarding
"the personal behavior of Nikola's
"former executive chairman, Trevor Milton,
"we want to emphasize that GM
strongly condemns sexual harassment and abuse of any kind.
And it seemed like the deal
might finally come to a bitter end.
No one wants to be involved with a sexual assault scandal.
But to everyone's surprise GM didn't back out
and negotiations are continuing.
So why is GM doing this?
Why would they wanna be associated
with the absolute dumpster fire that Nikola has become?
The simple answer is that there's no downside for GM
in this deal.
It cost them nothing.
There are several outs in the agreement
and all they would have to do, is employ technology
that they were already developing and producing.
If the partnership somehow succeeds after all this,
GM gets a stake in the company,
a sweet deal providing fuel cells
and maybe most importantly,
practice running an EV company on someone else's dime.
It's pretty genius.
From a reputation perspective though,
GM can stay relatively under the radar
when it comes to their partnership with Nikola.
The EBS they produce would be branded, sold and repaired
by Nikola, GM stays clean from complaining customers.
And if you're not watching
the finance in automotive headlines like I am,
the average consumer would barely notice.
If Nikola goes under,
the worst damage that GM would sustain,
is a temporary black eye on its reputation.
Plus, they get Nikolas facilities,
which would support their need for EV real estate.
There's no downside.
They come out relatively unscathed if it goes bad,
and if Nikola happens to deliver
after GM gives them all the tech they need,
then that's a huge move in the race against Tesla.
It's just a win-win all around for GM.
Things are coming up General Motors.
I think the big question
that we're all waiting to be answered as the story develops
is, will GM pull out of the deal?
They don't have much to lose from it.
But in light of recent revelations,
it seems that the reputation backlash
might be bigger than expected,
after, all Milton is a convoy
and an accused sexual assaulter,
not a great name to be connected to.
I think they're gonna use this to their advantage
and do some major strong arming while renegotiating terms.
I think they'll take a much larger
percentage of the company, probably around 30%.
And along with Steven Girsky,
lead a sort of rebrand and hopefully name change,
to close the deal.
GM is under major pressure to compete with Tesla,
and with the Tesla semis arrival creeping up on us,
GM has an opportunity to give them a roll down the hill
for their money.
I think they're gonna treat Nikola like their EV branch
while maintaining a safe enough distance
as to not tank their reputation completely.
Do I think they should do this?
Not really.
I think they should back out of the deal
and distance themselves from the bad vibes
and continue to work with Honda to make their own EVs.
After all, the Bolt has more technology in it
than the entire Nikola facility.
Thank you very much for watching WheelHouse this week,
it means a lot.
I really love Evs,
so to see this huckster come in
and take advantage of people's optimism basically
for this technology is really messed up,
and kind of sets EVs back a little bit.
But, this kind of stuff happens in every technological leap.
So, I'm not surprised that.
We have podcast, not a lot of you know that.
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Thank you very much for watching, be kind.
I'll see you next time.