GM just announced it is taking a $2 billion stake in Tesla rival Nikola

Nikola founder and executive chairman Trevor Milton had joined up with GM. Massimo Pinca/Reuters
  • General Motors and Nikola announced a $US2-billion deal to produce vehicles using GM’s Ultium battery technology, fuel-cell systems, and manufacturing expertise.
  • The first vehicle to result from the partnership would be the Nikola Badger, a pickup truck entering production in 2022.
  • Share of both companies moved higher in pre-market trading on Tuesday.
  • The news comes after GM and Honda announced plans to develop a partnership in North America.
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GM is moving fast to stay competitive in the post-coronavirus auto industry. On Tuesday, the largest US carmaker by sales announced a “strategic partnership” with Nikola, a six-year-old company that recently minted a $US13-billion market capitalisation.

The deal entails GM taking a $US2-billion stake in Nikola. In a statement, the companies said Nikola would swap the equity for “in-kind services and access to General Motors’ global safety-tested and validated parts and components.”

The statement continued: “General Motors will engineer, homologate, validate and manufacture the Nikola Badger battery electric and fuel cell versions.”

The partnership would also provide access to GM’s fuel-cell technology, to be used for heavy trucks.

GM and Nikola unveiled the deal just a week after GM and Honda said they have signed a memorandum of understanding to pursue a strategic partnership in North America.

“This strategic partnership with Nikola, an industry-leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and … fuel cell systems,” CEO Mary Barra said in a statement.

GM EV Barra
GM CEO Mary Barra at an event in Detroit to reveal the company’s Ultium battery technology. GM

“By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production,” Nikola founded Trevor Milton said.

“Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed.”

Nikola shares, which were listed earlier this year through a special-acquisition merger, shot up almost 39% on the news, in pre-market trading after the holiday weekend. GM shares gained 7%.

The companies said that the first vehicle to result from the deal would begin with the Nikola Badger, a pickup designed to be produced in both electric and fuel cell versions, entering production in 2022. Additional vehicles — the Nikola Tre, Nikola One, Nikola Two, and NZT — would follow.

GM stake would be locked up until 2025, the automaker said.