A battery-electric Nikola Tre semitruck. Nikola is recalling all of the battery-electric Tres to repair a flaw in their battery packs that could start a fire. Five battery-electric Tres were destroyed in a fire at Nikola’s headquarters in June 2023.
Courtesy: Nikola
Shares of electric truck maker Nikola opened sharply lower Monday after the company announced a recall of all the battery-electric semitrucks it has made to date — 209 in total — after an investigation into a recent fire found a flaw.
Shares were down about 11% in mid-morning trading Monday to roughly $1.75 each.
The recalls do not affect Nikola’s latest model, a semitruck powered by a hydrogen fuel cell. Production of the fuel cell trucks began last month.
Nikola said late Friday that a third-party investigation found that a coolant leak inside a battery pack was likely responsible for a fire in a truck parked at the company’s Phoenix headquarters on June 23. That fire spread to other nearby trucks, destroying five.
Nikola had originally suspected that the trucks were deliberately set on fire in an act of vandalism. It now believes that “foul play or other external factors were unlikely to have caused the incident,” it said in its Friday night statement.
A second truck used by the company’s engineering team had a similar battery-pack malfunction on Aug. 10, though the problem was caught before it became a major fire, Nikola said.
Following the third-party report, Nikola’s own engineers determined that a component in the battery pack, manufactured by an outside supplier, is the likely culprit. It expects to have a repair available soon.
The company is halting sales of its battery-electric trucks until the repair is available.
Nikola is remotely monitoring all of its battery-electric trucks for signs of a similar defect. Although the company said it believes the risk is low — only two battery packs out of over 3,100 made have had the problem, it noted — it advised operators that while they can continue to use the trucks, the trucks should be parked outside until the repair is made.
Electric heavy-truck maker Nikola will find out later Thursday whether its shareholders have approved its plan to raise money by selling more stock.
Nikola hopes to raise more capital to help ramp up production of its new fuel-cell-powered electric heavy truck, set to launch later this month. But before it can sell additional stock to raise money, it needs to increase the total number of shares it’s authorized to issue to 1.6 billion from 800 million. That move requires shareholder approval.
Nikola first put the plan to its shareholders at its annual meeting in June. While 77% of those who voted were in favor, there weren’t enough total shares voted to pass the proposal. Nikola is incorporated in Delaware, and under that state’s law, at least half of the total outstanding shares of a company’s common stock must be voted in favor for a share-increase proposal to pass.
The company adjourned its annual meeting for a month to try to get more of its shareholders to cast votes. The meeting will resume at 4:00 p.m. ET on Thursday, at which time Nikola will reveal whether the proposal passed – or if it will adjourn again to try to get more shareholders to vote.
This isn’t the first time that Nikola has had to adjourn a shareholder meeting to drum up more votes for a proposal to sell new stock. Last year’s annual meeting was adjourned threetimes before Nikola won enough votes to raise its total shares outstanding to 800 million from 600 million.
Nikola said Wednesday that it built 33 of its battery-electric Tre semitrucks in the second quarter and delivered 45 to its dealers. Its dealers sold 66 trucks to customers during the period, and a total of 99 since the beginning of 2023.
Nikola said on May 9 that it suspended production of the battery-electric Tre to focus on launching the fuel-cell version of the Tre, which has significantly longer range. At the time, it said that 12 fleet customers had ordered a total of 140 of the upcoming fuel-cell trucks.
Nikola is working to build out a network of hydrogen refueling stations to support those upcoming fuel-cell trucks. It said on Tuesday that the California Transportation Commission had awarded it a $41.9 million grant to build six of those stations in southern California, in collaboration with the state’s department of transportation.
Nikola is expected to report its second-quarter results in early August.
A general view of Micron Technology’s building in Singapore, June 23, 2020.
Micron Gcm Studio | Reuters
Check out the companies making headlines in midday trading Monday.
Block — Shares of the payments stock lost 3% following a downgrade to market perform from outperform by KBW. The firm cited pressures from “‘small risks starting to add up,” including potential regulatory scrutiny of its Cash App business.
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Tesla — Shares of Elon Musk’s electric vehicle company fell more than 1.5% after the firm announced another price cut in the U.S., its fifth since the start of the year. The move came as tougher U.S. standards are set to reduce the $7,500 tax credit available for Tesla’s Model 3. The EV maker also said Sunday it will open a new Megafactory in Shanghai that is capable of producing 10,000 Megapacks — large batteries —a year.
Micron Technology — Micron Technology’s shares gained 8% after its rival Samsung Electronics announced that it plans to cut memory chip production in the near term. Many Wall Street analysts said the move could accelerate a return to supply-demand balance and potential rebound in the chipmaking sector. Chip giant Western Digital also added about 8%.
Excelerate Energy, EQT and other gas stocks — Shares of Excelerate Energy, EQT and other gas stocks ticked higher as natural gas futures climbed. Excelerate added more than 1%, while EQT jumped 3.7% and Matador Resources gained 2.9%. Excelerate also got a boost from a new Deutsche Bank report, wherein the firm initiated coverage of the stock, rated it a buy and said it was trading below its industry peers.
Apple, Google, Microsoft — Shares of major technology companies were in the red during Monday’s trading session. Apple’s stock price lost 2%, Google-parent Alphabet shed 2.8% and Microsoft lost 1.4%.
Taiwan Semiconductor — Shares of the chip giant dropped 2.2% in midday trading after the company saw a decline in monthly revenue for the first time in four years. The stock is still up roughly 17% from the start of the year. Last month, Bank of America upgraded its price target on the company, believing it stands to benefit from investor interest in generative artificial intelligence.
New Fortress Energy — The stock gained 4% after Deutsche Bank initiated New Fortress as a buy. The bank said the company is well positioned in the liquified natural gas sector, which it believes has “potential to create outsized investment opportunities.”
Nikola — Shares fell 3% after Evercore ISI reiterated its in line rating. The firm also cut its price target in half to $1, saying the company has too many headwinds.
Five Below — Shares of the discount retailer gained 3.9% after Roth MKM said that Five Below might be helped by the success of “The Super Mario Bros. Movie,” which reported stronger-than-anticipated box office results.
AMC Entertainment, IMAX, Cinemark Holdings — Shares of major theater chains were in the green on Monday after the box office success of “The Super Mario Bros. Movie,” which was made by Universal Pictures. AMC’s stock price popped 6.7%, IMAX soared by 2% and Cinemark gained 5.7%.
— CNBC’s Jesse Pound, Hakyung Kim, Samantha Subin, Yun Li, Alex Harring and Brian Evans contributed reporting
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “The Super Mario Bros. Movie.”
A ChargePoint station at the New Carrollton Branch Library in New Carrollton, Md.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Check out the companies making headlines in midday trading.
TG Therapeutics — Shares jumped more than 9% after the biotech company announced this week that the U.S. Food and Drug Administration approved its treatment for relapsing forms of multiple sclerosis in adults.
Micron Technology — Shares of the chipmaker dropped 2% after the stock got downgraded to hold from buy by Argus Research. The firm cited the potential for deep operating losses in upcoming quarters.
GlobalFoundries — Shares of the semiconductor manufacturer lost more than 1% a day after a report that the company will lay off 50 workers from its former California headquarters, according to the Silicon Valley Business Journal.
ChargePoint — The maker of EV charging technology saw shares rise more than 4% after Q-GRG VII (CP) Investment Partners bought more than 1.4 million shares, according to a filing with the Securities and Exchange Commission.
Nikola — Shares of the electric vehicle company fell more than 6% Friday. The move came as the company announced plans to raise cash by selling up to $125 million of senior convertible bonds
— CNBC’s Nick Wells, Alex Harring, Sarah Min and Samantha Subin contributed reporting
DETROIT — General Motors is suspending its advertising on Twitter following Elon Musk’s takeover of the social media platform, the company told CNBC on Friday.
The Detroit automaker, a rival to Musk-led electric vehicle maker Tesla, said it is “pausing” advertising as it evaluates Twitter’s new direction. It will continue to use the platform to interact with customers but not pay for advertising, GM added.
“We are engaging with Twitter to understand the direction of the platform under their new ownership. As is normal course of business with a significant change in a media platform, we have temporarily paused our paid advertising. Our customer care interactions on Twitter will continue,” the company said in an emailed statement.
Under CEO Mary Barra, the Detroit company was among the first automakers to announce billions of dollars in spending to better compete against Tesla in the battery electric vehicle segment.
A General Motors sign is seen during an event on January 25, 2022 in Lansing, Michigan. – General Motors will create 4,000 new jobs and retaining 1,000, and significantly increasing battery cell and electric truck manufacturing capacity.
Jeff Kowalsky | AFP | Getty Images
A spokesperson for Ford Motor, another Tesla rival, told CNBC that the automaker is not currently advertising on Twitter, and had not been doing so prior to Elon Musk’s take-private deal. They added, “We will continue to evaluate the direction of the platform under the new ownership.”
However, when presented with a screenshot of a promoted tweet from Ford CEO Jim Farley, the spokesperson could not confirm when was the last time Ford or its collaborators may have paid for ads, including promoted tweets, on the platform.
Ford is continuing to engage with its customers on Twitter.
Other auto companies, including Rivian, Stellantis and Alphabet-owned Waymo, did not immediately respond to requests for comment on whether they plan to suspend advertising or discontinue using the social media platform in wake of Musk’s $44 billion buyout of Twitter.
Electric truck maker Nikola said it had no plans to change anything regarding the platform.
The future direction of Twitter has been central to the takeover story. Musk has said he is a “free speech absolutist,” who would restore the account of former President Donald Trump, who was banned over his tweets during the Jan. 6, 2021, Capitol insurrection.
Musk said on Friday that he plans a “content moderation council” and will not reinstate any accounts or make major content decisions before it is convened. Musk also said in a statement to advertisers this week that he cannot let Twitter become a “free-for-all hellscape.”
Henrik Fisker, CEO of EV startup Fisker Inc., deleted his Twitter account earlier this year when Twitter’s board accepted Musk’s bid to buy the company and take it private. Fisker Inc. continues to use Twitter, which every major automotive brand utilizes for customer engagement and marketing.
Musk has long boasted that Tesla does not pay for traditional advertising, a cost that has added up for conventional automakers’ brands through the years.
Instead, Tesla rewards people who run, or are members of, Tesla owners’ clubs as well as other social media influencers who promote the company’s products, stock and Musk on social networks, especially Twitter and YouTube as well as on fan blogs.
They are often granted early access to Tesla products, like the company’s Full Self Driving Beta software, and given passes to company events where attendance is limited.
In September 2020, Tesla weighed a stockholder proposal to begin strategic, paid advertising to educate the public about its vehicles and charging network. The Tesla board recommended against it, and shareholders voted with the board against starting to pay for traditional ad campaigns.
In the company’s annual report for 2021, Tesla wrote: “Historically, we have been able to generate significant media coverage of our company and our products, and we believe we will continue to do so. Such media coverage and word of mouth are the current primary drivers of our sales leads and have helped us achieve sales without traditional advertising and at relatively low marketing costs.”
It reported marketing, promotional and advertising costs were “immaterial” for the years ended Dec. 31, 2021, 2020 and 2019 in financial filings with the Securities and Exchange Commission.
— CNBC’s John Rosevear contributed to this report.
NEW YORK — The wealthy founder of Nikola Corp. was convicted Friday of charges he deceived investors with exaggerated claims about his company’s progress in producing zero-emission 18-wheel trucks fueled by electricity or hydrogen.
A jury reached the verdict against Trevor Milton after deliberating for about five hours in federal court in Manhattan.
At trial, the government had portrayed Milton as a con man while his lawyer called him an inspiring visionary who was being railroaded by overzealous prosecutors.
Those prosecutors alleged that Nikola — founded by Milton in a Utah basement six years ago — falsely claimed to have built its own revolutionary truck that was actually a General Motors Corp. product with Nikola’s logo stamped onto it. There also was evidence that the company produced videos of its trucks that were doctored to hide their flaws.
Called as a government witness, Nikola’s CEO testified that Milton “was prone to exaggeration” in pitching his venture to investors.
“The lies — that is what this case is about,” prosecutor Matthew Podolsky told the jury in closing arguments Thursday.
Defense attorney Marc Mukasey urged acquittal, saying there was “a stunning lack of evidence” that his client ever intended to cheat investors.
Milton, 40, had pleaded not guilty to securities and wire fraud. He resigned in 2020 amid reports of fraud that sent Nikola’s stock prices into a tailspin.
At one point, the trial was delayed for more than a week after Milton’s lawyer tested positive for the coronavirus.
A federal jury in New York convicted Nikola Corp. founder Trevor Milton of securities fraud for what prosecutors said were his repeated lies about the development of the company’s zero-emissions trucks and technology.
The guilty verdict caps the downfall of Milton, who founded Nikola NKLA, -1.29%
in his basement in 2015 and took it public in 2020 at a valuation of $3.3 billion, when the company hadn’t sold a single truck. The company’s market valuation briefly exceeded that of industry giants such as Ford Motor Co. F, -0.85%
NEW YORK — The fate of Nikola Corp ’s founder will be in the hands of a jury after he was portrayed Thursday in closing arguments by a prosecutor as a habitual liar, and by his lawyer as an inspiring visionary being unjustly prosecuted.
Trevor Milton, 40, has pleaded not guilty to securities and wire fraud. In 2020, he resigned from the company he founded in a Utah basement six years ago.
Deliberations will begin Friday in the Manhattan federal criminal trial, after it was delayed for over a week after Milton’s lawyer tested positive for the coronavirus.
In closings Thursday, defense attorney Marc Mukasey urged acquittal, saying there was “a stunning lack of evidence” that his client ever intended to cheat investors.
“The government never proved fraud,” Mukasey said. “There were no crimes here and Trevor Milton is not guilty.”
In 2020, Nikola’s stock price plunged and investors suffered heavy losses as reports questioned Milton’s claims that the company had already produced zero-emission 18-wheel trucks.
The company paid $125 million last year to settle a civil case against it by the Securities and Exchange Commission. Nikola, which continues to operate from an Arizona headquarters, didn’t admit any wrongdoing.
In his closing rebuttal argument, Assistant U.S. Attorney Matthew Podolsky insisted the evidence was overwhelming that Milton lied repeatedly to make it seem Nikola had produced operable trucks fueled by hydrogen gas and that the company had billions of dollars in contracts when they didn’t exist.
Podolsky said Milton wanted to get rich and learned that he could dupe investors into supporting Nikola through lies, like when he claimed Nikola had built its own revolutionary truck that was actually a General Motors Corp. product with Nikola’s logo stamped onto it.
Another example was when he sped up the video of a truck rolling down a hill to make it seem like the company had developed a fully functioning truck when it had not, the prosecutor said.
“The lies. That is what this case is about,” Podolsky said.
He said Milton went on television news programs to tell his lies and tweeted them as well.
Podolsky told jurors not to accept Mukasey’s explanations for his client’s behavior, including arguments that Milton had the support of the company’s board of directors and was not warned by anyone to stop conveying his enthusiasm for Nikola publicly.
“This is the robber blaming the guard for not stopping him,” he said.
