Nikola shares jump after GM executive backs deal

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FILE PHOTO: U.S. Nikola's logo is pictured at an event held to present CNH's new full-electric and Hydrogen fuel-cell battery trucks in partnership with U.S. Nikola event in Turin
FILE PHOTO: U.S. Nikola’s logo is pictured at an event held to present CNH’s new full-electric and hydrogen fuel-cell battery trucks in partnership with U.S. Nikola event in Turin, Italy, December 3, 2019. REUTERS/Massimo Pinca

October 21, 2020

(Reuters) – Shares of Nikola Corp <NKLA.O> rose nearly 10% on Wednesday after a General Motors <GM.N> executive said the Detroit-based automaker still sees potential in a partnership with the electric and hydrogen truck startup, and is still discussing a deal.

“We are continuing discussions,” GM President Mark Reuss said during a conference call with analysts.

A partnership with Nikola presents “a big opportunity for us” to bring fuel cell technology developed by GM and Honda <7267.T> to market in Class 7 and 8 commercial trucks, Reuss said.

GM and Nikola also are discussing a deal under which Nikola would pay GM to build its Badger electric pickup, Reuss said. GM and Nikola in September outlined a deal that would give GM emissions credits from sales of the Nikola Badger, as well as $750 million to fund tooling for production.

The credits could allow GM to continue to sell its highly profitable gasoline-burning pickup trucks and sport utility vehicles without regulatory penalties.

Nikola shares jumped in early trading Wednesday after Reuss made similar comments to CNBC. (https://bit.ly/3ofG0Kf)

The alliance announced in September included plans for GM to receive an 11% stake in Nikola, then worth about $2 billion, and payments up to $700 million for building the startup’s Badger pickup.

Days after the deal was announced, short-seller Hindenburg Research released a scathing report that called Nikola a “fraud” and said its founder and then executive chairman Trevor Milton had made false claims about Nikola’s proprietary technology.

(Reporting by Tiyashi Datta in Bengaluru and Joe White in Detroit; Editing by Ramakrishnan M. and Chris Reese)

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