Running out of cash Nikola balances on the verge of bankrupcy

Embattled hydrogen truck maker Nikola is grappling with severe financial strain as it scrambles to secure funds and stave off bankruptcy. The company has confirmed another round of layoffs this month while warning in filings with the US Securities and Exchange Commission (SEC) that it does not have enough cash to sustain operations through the first quarter of 2025.

In the SEC filing, Nikola stated, “We currently estimate that our existing financial resources are only adequate to fund our forecasted operating costs and meet our obligations into, but not through, the first quarter of 2025.”

Signs of decreased activity

The alarm bell sound is accompanied by a workforce reduction following a 15% layoff announced last October. Nikola attempts to slash costs to align with its current operational needs. While the scope of the most recent layoffs remains undisclosed, signs of decreased activity at the company’s Arizona production facility, captured in a drone flyover, suggest deeper cuts are underway.

The company admitted the layoffs could impact operations, citing potential “loss of institutional knowledge, decreased morale, an adverse impact on our reputation and challenges in attracting new talent.”

Fraud conviction

Once valued at $34 billion, Nikola’s market capitalization has plummeted to around $100 million. The company is hemorrhaging approximately $200 million each quarter—roughly equivalent to its cash reserves at the end of the third quarter. To stay afloat, Nikola recently secured $65 million through a deal with noteholders, which buys the company about one additional month of operating time.

Nikola announced plans to issue an additional $100 million new shares to raise more cash. However, this strategy has been met with frustration from existing shareholders, as it dilutes their ownership. The offering began three days ago, but the company has not disclosed the proceeds.

Aggravating the financial stress, Nikola is still on the hook for $80 million of a $125 million settlement related to the fraud conviction of its former CEO and founder, Trevor Milton. A court has ruled that Milton owes the company $165 million in compensation, but Nikola has yet to recover any of those funds.

No signs of profitability

Nikola’s journey since its high-profile launch has been far from a walk in the park. The company faced significant setbacks with its battery-electric trucks in 2023, leading to a recall of all 209 units delivered due to fire risks. This forced a pivot to fuel-cell hydrogen truck production, but that shift wasn’t smooth either.

Customers have reported issues with the hydrogen-powered trucks, and Nikola is selling the vehicles at a significant loss. Adding to the instability, the truck maker sold its stake in a European joint venture with Italian truck manufacturer Iveco, effectively pulling out of the European market.

The decision was seen as a retreat from one of the most promising growth regions for clean commercial vehicles. With limited cash and no signs of profitability, Nikola’s future hangs in the balance.