PHOENIX, Ariz. — Troubled electric vehicle manufacturer Nikola Corporation has filed for Chapter 11 bankruptcy protection, months after warning that it would likely run out of cash in early 2025.
The Arizona-based company filed for bankruptcy in the United States Bankruptcy Court for the District of Delawareand announced plans to pursue an auction and sale of the business.
The filing comes after a tumultuous period marked by financial instability and the fallout from the 2022 fraud conviction of Nikola’s founder, Trevor Milton, who was sentenced to four years in prison for misleading investors about the company’s technology and production capabilities.
From Wall Street Darling to Bankruptcy
Nikola was once hailed as a rising star in the EV market but became embroiled in scandal after it was revealed that Milton had exaggerated claims about the company’s zero-emission trucks. In one instance, prosecutors revealed that a promotional video showed a nonfunctional prototype simply rolling downhill to appear operational.
Despite efforts to stabilize the company, Nikola’s financial troubles deepened. The company revealed it has about $47 million in cash and plans to continue limited service and fueling operations through the end of March—pending court approval—but acknowledged that additional funding will be needed beyond that point.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate,” said CEO Steve Girsky.
Failed Fundraising and Legal Troubles
Girsky noted that despite recent efforts to raise funds and cut liabilities, the company was unable to avoid bankruptcy.
“The Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the Company and its stakeholders,” he said.
Nikola’s downfall was accelerated by Milton’s legal troubles. In December 2023, he was sentenced to prison for defrauding investors by exaggerating the company’s ability to produce zero-emission 18-wheel trucks. Prosecutors also revealed that some Nikola vehicles were actually General Motors products rebranded with Nikola’s logo.
The company previously paid a $125 million settlement to the Securities and Exchange Commission (SEC) in 2021 over civil fraud charges, without admitting wrongdoing.
Stock Plummets Amid Bankruptcy News
News of the bankruptcy filing sent Nikola’s stock price plummeting, with shares dropping more than 47% in premarket trading on Wednesday.
Despite once being positioned as a major player in the EV market, Nikola’s future remains uncertain as it navigates the bankruptcy process and seeks potential buyers.
