Nikola goes bankrupt amid cash burn, files for Chapter 11 bankruptcy protection; EV maker stock crashes to all-time low

Nikola said on Wednesday it had filed for Chapter 11 bankruptcy protection and would pursue a sale of its assets, the latest electric-vehicle maker to stumble after grappling with tepid demand, rapid cash burn and funding challenges.

The development ends a challenging journey, which included several leadership changes, plummeting share values and short-seller allegations.

EV startups that went public during the pandemic, promising to revolutionize the sector, such as Fisker, Proterra and Lordstown Motors have filed for bankruptcy in recent years as funding for their capital-intensive operations dried up due to high interest rates and flagging demand.

Nikola’s shares plunged 54% as of 8 a.m. Wednesday before regular trading in New York. The stock lost 97% of its value over the past 12 months through Tuesday.

The company has been on a tumultuous journey since it went public in 2020 through a deal with a special purpose acquisition company, with its stock surging in its early days. Shortly after, Bloomberg News reported that founder Trevor Milton had overstated the capability of Nikola’s debut truck. Those allegations, coupled with a subsequent short-seller campaign targeting the company, led to Milton’s ouster and later conviction on fraud charges.

In recent years, the company has endured cash-flow issues, slow demand and executive turnover. Nikola also recalled its battery-electric trucks after battery fires in 2023 prompted it to temporarily halt sales.

Chief Executive Officer Steve Girsky, a former Morgan Stanley analyst and General Motors Co. executive, had been leading a recent effort to raise money or find strategic alternatives, Bloomberg reported.