I don't understand Nikola at all. There are so many red flags, yet large credible companies appear to be willing to partner with them and buy from them. I suspect the terms are probably quite one sided, but even then there's reputation risk for partnering with the next Theranos.
I listened to the CEO talk for an hour about their dedicated route hydrogen business model for trucking, and it actually seems like a good idea. The thesis is that 25% of trucks drive back and forth on the same route for their entire lifetime, so you pick the busiest route, build a hydrogen station on it, and sell a bunch of trucks to use it at capacity.
This avoids the chicken and egg problem of building thousands of stations everywhere before you can sell your first vehicle.
I don't know anything about the industry, and I wouldn't trust their ability to execute, but the plan itself seems sensible. As the renewable grid share increases, there's going to be a bunch of excess capacity at times that can be used very cheaply, meaning the end to end efficiency of hydrogen may not be a deal breaker. Without a multiple of current battery energy density, long range BEV trucking will be tough.
Then there's the Badger/GM partnership. They got Iveco to make their trucks, and now they're getting GM to make their pickup. It makes me wonder if their strategy is going to be permanently outsource manufacturing and try to be a Pepsi to Tesla's Coke, partnering with traditional manufacturers which are able to build vehicles technically, but lack the modern sexiness of the new crop of BEV car makers.
But if they do pull any of this off, it's going to go down as one of the greatest fake it til you make it examples in modern history. They probably did bullshit their way in to this market cap - I wouldn't be surprised if every word of the short seller report is true. But the market cap does opens doors.
This is the next Theranos. Theranos got walgreen and safeway to sign partnerships with them too. US xpress doesn't have the capital to buy the number of truck Nkla is claiming. They don't have a working prototype. Nobody on their Management team seems to have the background to invent a cell that they are claiming.
Wish the SEC would do their job before the Milton guy hides all his money.
The crazy part is how a hacked-together prototype wouldn't even be that hard for a company the size of Nikola. Trucks already exist. So too do hydrogen fuel cells, electric motors, batteries, and high pressure gas tanks. Just take all those components and hack them together into a working first generation prototype truck, and get some on the road.
Tesla did a great job of this in its earliest years on far less funding than Nikola has now. They took existing cars (Lotus Elises) and all they had to do was put in batteries and electric engines. You have to walk before you can run, which Tesla did and Nikola seems to be failing to do. Jumping straight to building an entire truck is lunacy.
I think you're right from the company's point of view, but I'm still glad that they didn't manage to hack together high-pressure hydrogen tanks into a truck and release it into public roads. Now that's a literal "move fast and break things" stuff.
I would take a handful of "hacked together" hydrogen tanks on trucks - especially given how safe they are now - over hundreds of thousands of idiots allowing their "full self driving" vehicle to "drive" itself.
At least Theranos never went public. Nikola did have to go through its proper SEC fillings before being traded on a stock exchange. How they managed to do it all fraudulently is beyond my comprehension. Would the SEC also be held responsible, these accusations turn out to be true?
Let's be realistic, the SEC is completely AWOL right now. There is no SEC.
A major CEO literally told the SEC to suck his genitalia on Twitter to an audience of millions. The same CEO is going to trial for fraud later this year. This same CEO has committed fraud on Twitter faking a take-public offer that never existed - a separate incident fraud incident from the trial. The SEC's response? A slap on the wrist and silence. Imagine those same actions just 10 years ago. That CEO's career would be over and they would never be allowed to be an officer in a public company ever again. I could go on about this one CEO, but maybe the guy is just untouchable so let's go elsewhere.
This is the same SEC that had no issues with Kodak almost performing the first Initial Bankruptcy Offering in history and has yet to move a finger on the incredibly suspicious options packages that board members received days before the government announced a multi-million interest in the company.
This is the same SEC that is absolutely blind to obvious Chinese frauds listed on the US market: GSX, IQ, TAL, etc. These companies are faking numbers and their activity is extremely obvious to anyone that looks with even an iota of skepticism. The SEC could assign an intern to look into these companies and gather enough evidence in a week. Many short sellers have even neatly packaged all the evidence and submitted it to the SEC and heard back nothing.
My point here is that people need to realise that the market is the wild west right now. The sheriff is gone and unless the media piles on something, the market just won't react.
They did a reverse merger, but not sure how much due diligence SEC does until it all goes down. Lets look at Enron, WorldCom, or even Theranos. SEC is also supposed to protect private investors too.
Theranos isn't Theranos b/c they failed to deliver on a product they said they could build. That is par for the course in startup and innovation. You think you can do something, that's why you go raise money, so you can share your thing with others!
Theranos is Theranos b/c they falsified test results. If no test results had been falsified, Theranos would have just been "another" failed startup, and Holmes would have been given another chance with more VC money to try again with a fresh idea.
MagicLeap is a perfect example of what Nikola will probably end up as. Raising tons of money to do something new, and dropping the ball on it. I remember reading an early article on Magic Leap about how they figured out how to make something float in mid air, no one is calling on the SEC to investigate them... MagicLeap did some really interesting things, just nothing that consumers can actually use (YET!)
What drives me insane is that the arguments for hydrogen trucking here is even stronger for building a damn train track. If 25% of trucks are running the same route for their entire life span, then they don’t have to actually be trucks; we are paying for flexibility that we don’t actually need.
* Trains have worse geometric constraints: you need larger curves, straighter tracks, longer acceleration/deceleration paths, and lesser grade. It's much harder to add track where none exists already.
* For efficiency reasons, trains want to be really long, so trains aren't dispatched until they're long enough to be worth doing so. Consequently, trains tend to be used only when either the source produces craptons of goods (ports, mines) or when there's no issue letting the goods sit around for a long while before a train picks them up (grains).
It's odd that there is so much interest in automated driving of trucks, which is a really hard problem, but very little interest in automatic shunting operations, which is technically easy in comparison. It would enable trains to compete better on trips which are shorter and/or have less volume.
Offhand, I suspect it's a labor issue. The real labor issue for transportation is in finding people to do long-distance drives, and the mandatory rest periods you have to have in those positions. In contrast, local transportation allows people to go home to their families every night, and given that the crew also partakes in other tasks (such as handling sign-offs and manifests), it's not immediately clear to me that you could actually eliminate human positions with automation.
To build on your second point, it also adds a step of complexity in the logistics process. You have to get your truckload of goods to and from the rail depot on both sides, so you're already using trucks.
Across all markets trains cost about 1/3 to deliver goods per ton mile[0]. And that’s before you consider the fact that roads are largely maintained on the public purse, representing a large hidden subsidy to the trucking industry that does the majority of damage to them. The issue is often that we don’t have enough rail, either to handle volume or to enough places.
Last mile will have to be trucks, of course. But those short routes are both more variable and shorter, making them easier targets for electrification. It’s the long haul stuff that’s the low hanging fruit here.
The Badger pickup partnership seems relatively safe for GM. At least the traditional electric one.
At the very least they are getting an aesthetically pleasing exterior design and a ready email list of potential buyers. And GM is capable of filling any vaporware gaps.
I share your opinion on the hydrogen semi truck though.
>The Badger pickup partnership seems relatively safe for GM. At least the traditional electric one.
>At the very least they are getting an aesthetically pleasing exterior design and a ready email list of potential buyers.
Is a pickup truck exterior design and a customer list worth the 3 billion in market cap that GM lost since the news broke?
GM may not take a monetary damage from dealing with Nikola, but they will still suffer a reputation damage. If and when Nikola folds, GM's management will be seen as hilariously incompetent for not doing the proper due diligence, and the market will price that in accordingly.
> Is a pickup truck exterior design and a customer list worth the 3 billion in market cap that GM lost since the news broke?
GM closed last week at $30.00.
GM closed this week at $30.46.
In between those two times, the $NKLA deal was announced on Tuesday and GM shot up a bit. Then Hindenburg published and GM sank to only a small gain on the week.
You can’t have GM take the $3B W on the $NKLA news and then complain about the $3B loss that is paired with it when the details are better understood.
If a company approached you and offered to give you $2B in shares, $0.7B in capex, and a book of cost-plus orders that uses your technology, how much due diligence is required/appropriate? “GM takes $2B stake in $NKLA” usually means they brought money to the table. In this case, it literally means they were given it and agreed to take it.
I was wondering about the terms of this deal. GM agreeing to provide vehicles to Nikola is a no-brainer. Taking on a stake in the Nikola was the big question mark in my mind. If Nikola gave them the shares, maybe the goal was to give GM a reason to keep Nikola solvent? Now GM has something to lose if Nikola tanks so they might be willing to invest some amount of money or repetitional capital to keep them afloat?
Or maybe giving the GM stake was just another smoke and mirrors bit on Nikola's part so they could claim a high profile "investor".
>There are so many red flags, yet large credible companies appear to be willing to partner with them and buy from them.
Large established companies partnered with Theranos too. The reason being those companies want the hype of the startup brand, and there are limited downsides to them if the startup fails.
The plan still does not make economical sense without massive reductions in the cost of hydrogen or massively more valuable carbon credits. However, if carbon credits become more valuable, synthetic gasoline will become economical as well.
Those are all big ifs. As far as I can tell, Nikola is bringing nothing to the table but hot air. No breakthrough in hydrogen production nor batteries nor engines, nothing that existing car makers do not already have.
It doesn't make sense today. But once the grid is mostly renewables, when the wind and sun are at their peak, power is going to be very cheap, and you can run your hydrolysis intermittently to match.
An apples to apples comparison to BEV is storing that power in stationary batteries and then charging vehicle batteries from those.
I don't know if hydrogen wins that match up, but I don't think it's clear that it doesn't.
In some hypothetical future that doesn't actually exist that might be true that we have 'unlimited energy' that is 'to cheap to meter'. However this reality does not yet exist and will not for many, many years.
Until then, having a system that end to end is only half as efficient is crazy.
And if in the 10-20 years electricity is actually that cheap, in the years we will have batteries that are WAY better then what we have now and the single advantage of hydrogen will have been reduced by a huge amount.
Batteries are likely reaching the end of their progress. Chances are there are no meaningful improvements left in batteries without some kind of major breakthrough.
From all the research on batteries I have done this is complete nonsense. Its the opposite actually, the amount of research and commercial opportunity is exploding.
You now have many university, governments and commercial all investing in batteries. And its not just startups, but its massive investment by starups and large companies.
There is the Battery 500 consortium that is lots of universities working together and some of those labs are commercially sponsors by Tesla and so on. They are focused on doubling the density with amazing lifetime and safer. This is mostly incremental work.
There is the Li-Sulfer program that the DoD has, its specifically at super high density that is another huge effort.
You have large scale improvements moving into current Lithium Ion, Single Cristal Cathodes, Dry Battery Electrode Technology, Tabless Cells, Lithium Doping, synthetic graphite anodes, silicon anodes are in the early stages of development. I could go on.
But on every level from incremental engineering and production improvements all the way to breakthrew chemistry is being worked on massively.
The amount of work on batteries is probably 100x or maybe 1000x higher then on fuel cells.
None of it has produced anything or has produced minimal gains. Seriously, look at the rate of actual improvement. Li-NCA existed more than a decade ago. Since then the best batteries have barely gotten better. Peak energy density has moved by around 1% per year, which is by any metric a crawl.
Scientists are making the mistake of chasing hype, not practical gains in energy storage. Fuel cells are on the "S" part of the cost reduction curve. Despite the difference in funding, we will see extremely fast forward movement in fuel cell technology due to this.
Peak energy density is not the only measure for practical battery.
If you look at cost and performance you will see massive improvements year over year. Those improvements will continue.
> Scientists are making the mistake of chasing hype, not practical gains in energy storage.
Actually they are working together very tightly with industry. The Battery 500 consortium consists of research where many of them have a commercial partner and their research directly influences next generation batteries. You literally couldn't be more wrong.
For the Li-Sulfer they are targeting batteries for DoD and NASA that will be very useful and practical for lots of use-cases.
> Fuel cells are on the "S" part of the cost reduction curve. Despite the difference in funding, we will see extremely fast forward movement in fuel cell technology due to this.
Many technologies don't get adopted. I have not seen a falling cost curve anywhere in fuel cells. The fuel cell cars are still incredibly expensive, 100% not competitive and not getting rapidly cheaper. Fuel cells get pushed by China, Korea and Japan governments funds far, far more then any intrinsic cost curve that is happening in the market. Even after decades of constant investment by Japan, they have barley made a blip in the market and when they appear at all they are heavily subsidized all the way from research to the fuel stations.
Cost is just the standard economies of scale. Going from MWh of battery storage to GWh of battery storage will produce those cost reductions. Li-Po batteries had had 20C discharge rates for many years. Nothing is really unexpected or breaking new ground.
> Many technologies don't get adopted. I have not seen a falling cost curve anywhere in fuel cells. The fuel cell cars are still incredibly expensive, 100% not competitive and not getting rapidly cheaper. Fuel cells get pushed by China, Korea and Japan governments funds far, far more then any intrinsic cost curve that is happening in the market. Even after decades of constant investment by Japan, they have barley made a blip in the market and when they appear at all they are heavily subsidized all the way from research to the fuel stations.
You suffer from the "not paying attention" disease. In the last few years, the biggest story in cleantech is the rapid reduction in fuel cell, hydrogen production, distribution and storage costs. Basically everything you said is obsolete already.
We could increase gasoline taxes so that roads, bridges, and tunnels are not falling apart. We could further tax gasoline to offset the emissions damage.
Nothing is ever going to seem reasonable so long as we keep comically underpaying for gas at the pump.
This is unlikely to occur because your average citizen doesn’t believe in paying the full costs of consuming fossil fuels. The only path to success is driving renewables and electric vehicles below the cost of fossil fuels.
It won’t happen because trucking won’t allow it. Practically speaking the vast majority of road damage is done by semi trucks, your average minivan isn’t doing much damage comparatively. Forcing them to pay their fair share for road cost would in effect be ending a multi billion dollar per year subsidy, and would drastically affect the cost of shipped goods for consumers in the short term.
For trucks you'd want synthetic diesel rather than synthetic gasoline. Biodiesel seems better though; AFAIK the feedstocks for synthetic fuels are still fossil fuels (gassified coal or natural gas.)
The problem is that even if you assume these hydrogen station can be built for one route, that is still quite a huge investment that you need to make for each route as these hydrogen stations are very expensive. That means you have to find enough costumers on one specific route that all buy into your truck in a very short time-frame.
Its basically a very large complex system with solar, hydrogen production, huge hydrogen storage and pumps with sufficient scale to fuel 10-100s of trucks a day. Where will Nikola get the expertise to build such a complex system fuel station system? A company that has basically 0 engineering credibility, is gone set up station like that because that is something that doesn't exist? Hydrogen is difficult enough to deal with for rocket companies, but Nikola is just gone manage all that.
To finance such a station you need lots of threw-put, and to have access electricity to fuel 10-100s of trucks every day seem unlikely to me. While access energy might exist on the grid in general, seems to me that enough incredibly cheap electricity right where you need it to fuel 100s of trucks a day is highly unlikely in the near or mid term future at least.
If Nikola really want to claim this system is cheaper overall, I would really like to see their numbers on how they get there. Sadly I suspect Nikola has never calculated those numbers with realistic expectation.
Energy density in batteries is rapidly increasing, even with current technology large parts of the trucking market can be addressed already. Some part of the longer running routes might just be divided into multi-hop routes. So you are really addressing a shrinking market segment and one that is shrinking because batteries are improving.
Can anyone name a single, legitimate company that has ever been "taken down" by short-sellers? A company which had a great business going, but short-sellers ruined it? I don't even think it's possible.
On the other-hand, frauds brought down by journalists and short-sellers are abundant.
In my experience, CEOs (in this case, the board Chairman) whining about traders is a huge red flag. What do they care what a bunch of people are doing with their ownership in the company? It's irrelevant to the day-to-day operations of the company, but certainly harms the narrative.
Problem is, it's almost impossible to know unless you're there. Companies that are dependent on financing might not get financing if loud short sellers are able to change the narrative, and then fail to achieve goals that would be achievable if investors were on board.
I don't know enough history to know concrete candidates, but I'd be very surprised if no company had ever been stopped from achieving a good trajectory by short sellers and other naysayers changing the perceptions of investors. Yes, there is a value in short selling as a market mechanism to detect fraud and correct incorrecly priced companies, but it's naïve to think it doesn't also incentivize destruction of initiatives that are actually valuable.
I did follow the short campaign against Tesla closely from 2014-2018. And that project was vicious. I could easily see it toppling a less-financed company, or one where the quality of their engineering was less obvious. And trust me, although things might look black and white in retrospect, there was nothing obvious about Tesla's success in 2014. The indications were pretty clear if you followed it closely, but this reality was in very sharp contrast with the narrative. I believe it was a closer call than most would believe in reterospect.
Comparisons with Nikola nonwithstanding, I believe you're wrong about loud short sellers in general not being able to destroy the prospects of a company that would succeed in their absence.
It's also fairly trivial to see that it's possible to destroy some companies this way simply by noting that some companies succeed and some companies fail, which implies that there exist companies at the margin whose success or failure depends on things like financing availability or interest rates.
Moreover, companies in that position are exactly those with the greatest profit potential for short sellers. Companies that are obviously going to succeed or already have aren't likely to decline in value in the near future. Companies that are obviously going to fail will have declined in value already.
The largest opportunity for short sellers is when there is that uncertainty, because then you have a company walking a tightrope and there are people willing to bet that they make it to the other side. The short sellers can take their money and then give the company a hard shove and hope that it makes them fall.
>The largest opportunity for short sellers is when there is that uncertainty, because then you have a company walking a tightrope and there are people willing to bet that they make it to the other side.
Provide an example of this happening.
Judging by many of these comments, I'm not sure some people here understand the mechanics of how selling shares short actually works. It does not, defacto, destroy any value in the company.
There's a pretty good case that they were trying to do this to Tesla. We heard all these claims about how nobody was really buying their cars and so on, which turned out to be bullocks, but were being made at a time when they were in a precarious financing situation.
But the general problem with asking for examples is that nobody has the inside information necessary to verify them. I can point to any company that went bankrupt following negative media coverage at the behest of short sellers, but how is anybody supposed to prove whether or not they would have survived in the alternative?
> Judging by many of these comments, I'm not sure some people here understand the mechanics of how selling shares short actually works. It does not, defacto, destroy any value in the company.
Are you sure you know how short selling works? Short sellers borrow shares in the company and then sell them, which temporarily increases the supply of shares on the market and suppresses the price. If the company at that point issues new shares or wants to borrow money against the value of their stock, it costs them money, i.e. reduces access to capital or requires them to pay higher interest rates, which negatively impacts the business.
And that's just the result of the actual short selling, not including the reputational harm caused by false allegations (or over-hyped technically true allegations), which can reduce demand from not only investors but the business's customers.
There's also a nicely written Forbes piece [1] from January, which focuses on the then-current Tesla situation, but which also references the Bill Ackman v Herbalife short battle.
Another, perhaps ultimate, persuader of the value to markets/investors of short-selling would be Michael Lewis's book, The Big Short [2]. An often overlooked point about short-selling is that it is frequently done, and it was certainly so in this case, in demonstration of utter conviction that the masses are being duped; rather than as some calculated bet against a single company.
Lots of companies finance themselves by debt or stock offerings, this being especially relevant in distressed situations. There has to be a buyer on the other side. Short selling, even if not accompanied by short reports, is visible to market participants.
If anything it promotes good corporate behaviour. See Steinhof as a good recent example of a company outed for fraud on an industrial scale by a professional short seller
>I believe you're wrong about loud short sellers in general not being able to destroy the prospects of a company that would succeed in their absence.
You believe I'm wrong, but can't name a public company that had its prospects destroyed by a short-seller? I take issue with that.
>I did follow the short campaign against Tesla closely from 2014-2018. And that project was vicious.
What leads you to believe that this is a "done-deal", and that Tesla has "won"? There are still many open questions about this company.
Did you know that the Wirecard fraud went on for a decade, and even the German financial regulators were going after journalists and short-sellers to protect the company? And it was a huge fraud. Now that it's out in the open, it's a very interesting read:
Nothing is ever a done deal. I'd wager money that Tesla will never drop below a market cap of $50 billion again, which is plus/minus 50% an OK definition of "succeeding" for the sake of my argument -- when seen against the narrative in the 2014-2018 timeframe -- but the prospect of a company is always probabilistic, and I'd never act in conflict with that understanding. It's only in reterospect that most will erroneously be convinced that the outcome was certain.
You can't prove a negative, and I was clear that I don't have the historic knowledge to provide good candidates for what you're asking. They certainly exist; sibling commenters have made some attempts. I made this comment because I didn't want your implied statement of "if you can't mention a specific name, you're wrong" to stand without providing a reasoned counter-argument.
The thing with Tesla is that they actually had their own tech IP and a killer product.
Nikola lied about its trucks, and now plans to outsource all of its production to other CV manufacturers, or at the very best buy parts off the market and "integrate" them in house.
Since they don't have the killer tech or top engineers what's stopping the next charismatic founder from selling the same exact thing Nikola has (dreams and a couple wrenches and bolts) and eating their lunch?
They have no working trucks or plans to begin production any time soon. And for a while their market cap was larger than Ford and GM.
Not saying they can't be successful, but Tesla they are not.
I wasn't explicit about this, but I fully agree that Nikola
is most likely smoke and mirrors. I was making a point about loud/activist short selling in general.
> Companies that are dependent on financing might not get financing if loud short sellers are able to change the narrative
How would this scenario play out for a non-fraud and non-zombie business? If a publicly-traded company is in such a precarious state that they need the large cash infusion of either debt or a secondary offering to remain in business, the conclusion is that the business is non-viable. Either they IPO'ed prematurely or the expected growth isn't materializing. The short-sellers are performing the broader market a service in this case.
Short selling by itself won’t ruin an otherwise good company, but if (false) rumors are spread, it can affect the company’s ability to raise capital or affect its relationships with suppliers, who could get nervous.
What I wanted to ask was, can anyone name a single, legitimate company that has threatened to sue short-sellers and ended up not being exposed as a fraud and/or bankrupt?
You can't really say this without the followers of the Church of Musk attacking you for going against the saviour of the human race, but this is why I think there is something very fishy going on with Tesla and Elon Musk who also has a tendency to blame short-traders for any negative press (of which there is a lot, some of it extremely unsettling).
>but this is why I think there is something fishy going on with Tesla
Well, maybe the Nikola thing will have people asking questions and holding Tesla to the same standard.
We know, from depositions in the Solar City law suit, that the solar shingle reveal was faked and non-functional. The shingles didn't exist in that form then, and still don't (they buy panels from China, the factory in Buffalo isn't doing anything). The battery swap demo was also likely faked, as was the "Paint it Black" self-driving video from 2016 (demonstrating self-driving capabilities Tesla still doesn't have in the real world, today). Those are off the top of my head.
I’m curious about Tesla over hyping certain maturity of their tech and other things. They appear to me to dress up non-functional prototypes and make big events around them, only showing the feature in a certain, controlled environment. Sort of like a magician creating an illusion.
How many years now has Tesla claimed that full autonomous driving will be ready by the end of the year? They sell a lot of that “software” which to me appears to be vapor ware and they claim the price will rise when the tech is GA’d so you should buy now. It just seems suspicious to me.
Even the giga-factories don’t look anything like the designs they promoted. They look like, well every other car factory.
I get that they don’t advertise so they smartly generate hype in other ways.
Wasn’t Audi the first company to sell a level 3 car?
> Even the giga-factories don’t look anything like the designs they promoted. They look like, well every other car factory.
It turns out there's a reason factories look the way they do.
Much better to design the production process first and then fit a building around it than to try and fit the production process into a pre-designed building that's made too look pretty.
>Much better to design the production process first and then fit a building around it than to try and fit the production process into a pre-designed building that's made too look pretty.
What do you base this off of? What "magic" production processes are Tesla utilizing that other OEMs are not? Aren't EVs far simpler to assemble? Tesla are building some of the lowest-rated cars out there in terms of fit and finish. Why do you believe they are doing anything from that end "better" than other manufacturers?
> They appear to me to dress up non-functional prototypes and make big events around them, only showing the feature in a certain, controlled environment.
Any evidence for that? That a hell of an accusation.
Since literally the Roaster Tesla offered test rides on all of these vehicles. The Roadster 2, Cybertruck and so on all were driving around costumers all night. They were fully functional. The Tesla Semi is regularly transporting things between California and Nevada.
Now can we prove that the prototype Cybertruck could do the most hardcore rally in the world? No, but calling them non-function is just laying unless you have evidence to back it up.
> How many years now has Tesla claimed that full autonomous driving will be ready by the end of the year?
Elon is overconfident about AI, everybody knows that. If you don't believe it, don't buy it. Also the revenue they get from FSD is not actually realized unless they deliver on the features.
> Even the giga-factories don’t look anything like the designs they promoted. They look like, well every other car factory.
Elon has admired that he was wrong how easy it was to speed up production on Model 3. He took the blame for that mistake and since then they have worked and improved their production capability.
That is not a costumer features, and the reality is for no other company would you ever even get that information. For other car companies they release a press conference 'car delayed 6 month' not telling you why.
The glass broke on the Cybertruck. The course was closed as well and you couldn’t drive the vehicle. You could only be a passenger.
Their solar shingles are where?
The semi was to be in production 2 years ago. There are serious doubts it’s even viable for long haul.
The battery swap demo has never materialized and there’s doubt it is feasible.
They continue to show photos of a sleek, modern giga-factory with solar panel roofs. Meanwhile their factories look like any other car factory.
Their self driving tech has some cool demos of what the computer “sees” but there’s no evidence it’s close to being available or that it’s any better than where other companies like GM are with the tech.
I’m not trying to dump on Tesla - they’ve done a lot to push the industry forward. I’m just saying I think they generate a lot of hype but don’t deliver and they may have people confused on where they really are.
First of all, even if the glass broke. The window still worked. If it was a normal truck, the ball would have gone straight inside and killed the driver.
Its called a prototype for a reason and they have demonstrated the technology and multiple experts confirmed that this is in fact a viable technology.
> The battery swap demo has never materialized and there’s doubt it is feasible.
No there isn't. They had a working system, they demonstrated it and it was in open beta. And again, NIO has this working in China. Its literally just undoing 4 screws and let the battery fall out. I really don't understand why you feel the need to come of with a conspiracy theory on this.
The fact of the matter is that its a system that is simply not needed for 99.9% of situations and makes no operational sense for Tesla.
It is technologically clearly feasible but it operational impractical.
> They continue to show photos of a sleek, modern giga-factory with solar panel roofs. Meanwhile their factories look like any other car factory.
They are car factories? And they are modern looking. I don't understand what your problem is. They are very modern factories if you actually study what goes on in them. You just want them to put more solar cells on them? Is that your issue?
I really don't get what you complain about. The factories they build are being built very fast, and the have very good ROI if you look at their operational leverage. So they do exactly what Tesla says they do.
> Their self driving tech has some cool demos of what the computer “sees” but there’s no evidence it’s close to being available or that it’s any better than where other companies like GM are with the tech.
If you actually believe GM is just as far as Tesla then you haven't use those systems. They are clearly not.
> I’m not trying to dump on Tesla - they’ve done a lot to push the industry forward. I’m just saying I think they generate a lot of hype but don’t deliver and they may have people confused on where they really are.
It seem like you are nip-picking everything Tesla ever did wrong or not perfect and add some conspiracy stuff on top and ignoring everything they have delivered on.
That they delivered the Model Y early with excellent margin and low additional CapX. That they build up Giga Shanghai as fast as they did within a month are gone deliver Model Y from there. That they have managed to be profitable while they are still scaling and building factories like crazy. That they survived Covid with flying colors.
A lot of technology demos are bullshit. That's why I respect Apple so much, 99% of the time what they demo is actual working products they launch. This is why I avoid technology kick-starters and pre-orders like the plague. The last time I got suckered into a tech pre-order was the Lilly drone and I managed to shake off their spell and get a refund while they were still in their halo phase and had money to refund people.
Personally, I think the DOJ should get more involved in technology pre-sales and prosecute more aggressively. Pre-selling products you can't produce should be considered fraud.
The big and obvious difference between Tesla and Nikola is Tesla ships products and has been for years. Not only that, Tesla customers love the cars Tesla ships. Musk makes some exaggerated claims—and some truly egregious time line estimates—but usually ships. I tend to agree with you about the up-charge for FSD though. Definitely a bit of a shell game and moving goal-posts.
Why do you think the battery swap was faked? Changing the battery is not particularly difficult and the did have shortly after have a battery swap station open to select members of the public.
I think the battery swap program was somewhat legit. The demo was live in front of a fairly big audience. They also offered the service to a small group of people and some documented the process (and weren't particularly excited by it). The station they set up wasn't automated and took about 7 minutes instead of the the 90 seconds they previewed in the tech demo.
I suspect the battery swap idea was a response to the criticism about charge times. Since most Tesla users at that time used either free supercharger stations or charged at home, the appeal of for-fee battery swaps was likely limited.
Fully agree, which is why I pointed out the station fell short of their demo in my post.
I just don't see it as being deceptive in the way rolling a truck down a hill and suggesting it's operational is. Or at the very least, we're missing the smoking gun. Perhaps it is and someone who worked at Tesla or the blogger who posted about going to the station will come out and admit it was a big fake-eroo.
Finding the hill they pushed the truck down is pretty damning IMO in a way suspicions about Tesla's tech demo aren't.
There are plenty of deconstructed companies that have ended up with positive value left when all is said and done and creditors are paid. It is not super common but it does happen now and then.
Yes, short sellers are correct sometimes. Citron's report on
Valeant comes to mind. Actually, as I recall there was a report prior to Citron's that was much more convincing though didn't get as much publicity.
So your claim is that SolarCity was brought down by short-sellers, and not, in fact, that it was a terrible business? That's debatable. Borrowing short and lending on long-term leases was more likely the issue.
I'm still highly skeptical of Nikola, but it's not quite fair to characterize their response this way. The chairman here isn't complaining about the trading activity itself, just about the traders' report which he claims is full of lies.
Several of the claims should be fairly straight forward to dispute. For example, they should have some video of the truck driving under its own power as opposed to coasting down a long downhill. Certainly in this day and age they have plenty of documentation of their vehicles during testing and development.
To be clear, though, he’s complaining it’s full of lies, while saying he won’t debunk them because they’re asking the SEC to get involved. Which will take years, and needn’t prevent them from disproving the claims.
But I still think short selling is absurd and I don’t understand why we allow it. If you don’t think a company will do well then don’t buy their stocks. Simple as that. I don’t know why we allow seemingly infinite market gambling that benefits no one except the gamblers.
If Hindenburg is correct, I believe they provided a valuable information service to market participants by researching, writing, and releasing that report.
It happens that the economic incentive arose from shorting, but could have just as easily come (less efficiently) from buying naked puts.
Shorting serves a valuable purpose. It removes capital from the hands of people stupid enough to believe fraudsters, and reallocates it to people who dont. The whole purpose of markets is to facilitate the efficient allocation of capital, and shorting is clearly an important part of that.
If Hindenburg weren't financially incentivized to uncover this fraud, it seems likely they would not have bothered and many more people would get scammed by Nikola.
Worth nothing that Theranos wasn't public, there was no opportunity to short-sell. If there had been they might have been exposed much earlier and done a lot less harm.
I knew several people who said what they were claiming was impossible but they didn't really have any interest in being the whistleblower.
Care to back up that opinion? I'm quite curious to know why you think Hindenburg exposing this fraud to the world, and consequently saving countless more people from being scammed, isn't beneficial to society and legitimate business.
Short sellers provide liquidity to the market by providing purchasable shares in an equity when none might exist. Short selling does NOT provide infinite market gambling. Short selling is incredibly risky with an unlimited downside, these types of investors can lose all their money and then some pretty easily. Short sellers in Tesla over the years have bled huge losses. "The markets can remain irrational longer than you can remain solvent." (Keynes) is appropriate here, as stocks like Tesla continue to climb the short sellers keep having to infuse cash to cover the mark-to-market prices. Eventually, they run out of cash.
Yes, the latter is far riskier and obligates you to buy shares later, meaning you have to have more conviction in your investing thesis.
(Disclosure: I’m short $NKLA after Hindenburg published. I believe it’s more likely going to the teens [and possibly worse] in 2020 than sustainably into the mid-40s. If it holds $30+ through 2020, I’ll probably cover.)
CEO claiming all the allegations are false, factual refutations totally exist, but they can't publish those refutations until the SEC "finishes their job". What a scam artist. Always some excuse, always delays, just milking the fraud as long as possible.
I have no insider info but leaning to believe that at least Hindenburg Research's report is partially correct based on a few things:
1. I listened to Nikola founder Trevor's interview on Jason Calacanis's podcast, and was sold on the advantage of Hydrogen fuel cell over battery for long haul trucks. Such a huge market! And then Trevor said Nikola, a 400 people company, are also working on the an electric pickup called Badger to be more consumer facing. This makes no biz sense to me at all and I realized they are probably just chasing the trend.
2 At the time Nikola doing the first Earnings call ever, Trevor was on a 6-day vacation in the Bahamas, while bragging about having a $13 Million airplane. Trevor is no Elon. No matter how much you hate Elon, he works his butt off, and that gets my respect automatically.
3 I understand Nikola want to protect their trade secrets and go through SEC first, but in their press release [2] they have shown nothing to prove that Hindenburg Research's report is wrong.
The SEC thing is a smokescreen. There is no reason to go to or via the SEC for their rebuttal, if anything they're just trying to get ahead of the PR nightmare of the SEC going to them.
Them staying silent and sending info to the SEC is a big red flag, but to the lay investor it looks good, which is why they did it.
I also find the specific wording of the counter interesting. They don't actually say anything is untrue, but instead use terms like "misleading information", "salacious accusations", and "not accurate". So I have a really hard time believing that the report is not onto something, because it definitely sounds like legal was consulted on the wording. It is very specifically phrased to, say, allow the reported facts to be true but the interpretation of the facts to be wrong.
Another thing, Nikola’s entire quarterly revenue of $36k was from solar installation for Trevor himself, and they are not a solar company . As a founder myself, I hate to doubt any other founders, but this isn't something an honest founder would do.
There's a simple antidote to the claims: ship products. The company appears to have trouble doing this, and AFAICT has not shipped a single production vehicle.
Nikola should focus on that, not trying to levitate the company's share price higher by jawboning.
The comparison to Theranos is apt in that the response of that company was to jawbone rather than ship.
They could completely discredit the Hindenberg report simply by release a video of the truck clearly driving under its own power. They haven't, and instead are just issuing these legal threats against shorters.
This hysteria against short sellers in some circles is great for hiding fraud. Wirecard also comes to mind.
Anti-short hysteria has been bugging me recently. It seems to be a recent trend and when I try to think who might have triggered it, I come up with one clear answer...
If they are lying about the drivability of One (which they almost certainly are), what does that say about Two? They've fairly obviously faked other tech, including covering up an OEM logo on an ostensibly original piece of tech with duct tape.
> Or showing the solar panels on the company’s roof?
Looks like they were installing ~200kWpp [0] in May 2020 over some of the parking lots [1]. Enough to charge a couple of Teslas.
[0] Looking at [1] I estimate a total of 560 (2x 150+130) solar panels, each 2x1m, which might be rated between 370 or 385 Wpp, delivering 207-216kWpp.
Did they indicate that that truck was a proper real thing, and their future trucks will be at least that capable? Or it was just a concept car, like what automakers used to do for decades?
It is more interesting to me there are no newer videos than this 2018 showing towing but they do have a video of one with look through https://www.youtube.com/watch?v=7LSrvRMgIqw
so I guess it comes down to this, if they want to dispel issues then let one of their planned early adopters take one for a spin.
They claim it's 1000HP, which would be simple to measure on a pad. Also I guess they could say that the engine is ready and can deliver all that power, but the power cells were not at the time.
(Anyway, I'm not saying they are so honest, transparent, open as fuck, but this is like a trailer for a movie or game, it's a PR piece. It's less shady than the Tesla/SolarCity roof tile demo that Elon did. And I'm looking forward to the court case, because I have no time nor much context really for unwinding this, but I'm interested in what really constitutes fraud in these days when everything looks amazing, everything has a super emotional soundtrack, and of course everything is super over-hyped.)
I'm so out of context for both of these things, that I really can't.
For me the Nikola video looks like a trailer, or like any typical over-hyped product launche for phones/laptops/gadgets. That it's a vehicle is almost irrelevant.
Also they claim in the youtube video's description that it's a 1000HP semi. And that seems like a very explicit claim. (So if it can't accelerate by itself, then where are those horsepowers. But as I tried to point out in a sibling comment, it's possible they can claim the engine is 1000HP but the fuel cells were not ready. On top of all that I'm very much interested in seeing this get to the courts and hear what they say about what constitutes fraud and what's just run of the mill hype.)
That particular video may have been an implicit lie, but the Hindenburg report reveals explicit lies from Nikola too. Particularly the adamant and explicit insistence that their fake truck was 'not a pusher', claiming it was a functional prototype.
That GM entered into a highly valuable partnership with this transparently fraudulent company doesn’t inspire confidence about their future.
Milton’s last company was accused of not delivering on deal terms, and it seems as though that company BSed their way to an acquisition. Before that, he was involved in random low-tech businesses - at least one of which he seemingly lied to a partner about his profit off of.
The company’s name is so unoriginal that I wonder how anyone can take them seriously. It’s like an off-brand Tesla - just riding the association to trick people into parting with their money?
I think this was one of the first red flags. It reminds me of ripoff movies that have names similar to popular movies to sleaze some of that popularity for themselves. Like Transformers / Transmorphers.
Nikola's refutation says that "an activist short-seller whose motivation is to manipulate the market and profit from a manufactured decline in our stock price published a so-called “report” replete with misleading information and salacious accusations directed at our founder and executive chairman. To be clear, this was not a research report and it is not accurate. This was a hit job for short sale profit driven by greed."
It seems clear that they are right that the report is driven by "greed" and "short sale profit", and that the goal is drive down their stock price. The more important question, though, would seem to be whether the accusations are true. Are there any Nikola supporters here who can debunk any of the bullet points at the top of the Hindenburg report: https://hindenburgresearch.com/nikola/.
Conclusively refuting any of them would be useful, but the most important ones to me are the ones involving their demos. Did they lie to the public about the functionality of their vehicles at the time? Or did they merely mislead the public with language like "in motion" and "cruising" to describe a truck rolling down a natural incline? Does that distinction matter to you, or only as relates to potential SEC action?
(I'm currently holding some puts that I bought---slightly too late to be profitable yet---as a result of Hindenburg's report, making me effectively short NKLA)
Its unfortunate that their failures are going to prevent VC investment in fuel cell tech for the next couple of decades.
Some suggestions, not that they're listening:
1) deliver one thing before promising the next
2) Use SOFCs, not PEMFCs. They're more stable, more efficient, longer lasting, higher power density, can use hydrocarbon fuels if necessary, produce heat at useful temperatures, and they're way cheaper. Their only disadvantage is their startup times, which is not a problem, and never has been, for long haul trucking.
3) Choose your competitors better. You have zero expertise in building trucks, but you have amassed expertise in building fuel cell power plants. Lucky you: trucking is nothing like cars...alternative powerplant manufacturers are extremely common upgrades when buying a truck. Instead of competing with Peterbilt, you should be competing with Cummins as a supplier for Peterbilt. And when you've pierced that market, you start going after Mitsubishi, Wartsila, Hyundai, Rolls Royce, and MAN.
Sadly, I've not been able to find a non-paywalled version syndicated anywhere else. (Although it can be retrieved at archive.is)
Some interesting quotes from the article:
In this relentless barrage of hype, delivered in a disarmingly low-key manner, it is easy to forget the reality. Nikola has yet to put any vehicles into production. And, as its regulatory filings make clear, it has no orders at all for its fuel cell trucks, only non-binding reservations.
As for all the technological brilliance ... there is precious little to be seen. Nikola boasts a grand total of only 11 patents in the US, with another 55 applications pending.
And later:
Nikola faked a video of one of its trucks by making it look like the vehicle was driving under its own power when it was really only rolling downhill, according to Hindenburg’s report — a claim backed up by FT reporting this week.
“It was built to be a working prototype,” Mr Russell insists of the truck.
But did it actually work? His answer, after a long pause: “I wouldn’t comment on that.”
In its pay-off, the FT draws pointed comparisons with Theranos.
I'm a little curious about the (allegedly?) rigged demos.
There's dozens of youtube garage tinkers who could slam some off the shelf parts into a random salvage chassis in under a week. Maybe they won't meet many performance targets but they'll at least be able to show something moving under its own power. The point is, making one electric or H2 vehicle is a very low bar now. Making one manufacturable, and a production line to do it, is the hard problem.
This dude IPOd a unicorn startup and is (for now) a billionaire by selling a vision of a manufacturing company with a non-working prototype that literally almost anyone with modest engineering skills could pull off.
The Founder has no engineering background (in fact no college degree), no experience in the vehicle industry, no brilliant engineers or killer patent on technology.
It smelled super fishy when they first IPO'd but I figured since all these VCs and vehicle manufacturers were partnering with them there must be something under the hood.
Now it seems like such a transparent fraud. How did so many people that should have known better get conned into this?
See electrek article Nikola admits to faking video of driving prototype [1]
And also Nikola press release [2], which states:
"As Nikola pivoted to the next generation of trucks, it ultimately decided not to invest additional resources into completing the process to make the Nikola One drive on its own propulsion."
$30 Billion valuation with no product, no customers.
Insiders taking millions out of the company.
Lied about major IP developments and ownership (Hydrogen, Fuel Cells, parts)
This is insane, and I can't believe that GM would go near this toxic pile of garbage, it's utterly shameful and makes GM execs look completely stupid and incompetent.
GM is getting an 'inspired truck idea' - how hard would it be to create a little independant division and hire some freaking designers and inspire people a little bit? Which would be good for their whole company?
Nikola looks like fraud, but they're just a scammers, in a way it makes GM look worse.
I don't think the comparison to Theranos is accurate. Nikola may be overvalued, but they do have (billions?) loads of pre-orders for hydrogen trucks. Manufacturing the vehicles isn't rocket science - lots of companies are manufacturing hydrogen buses that are in use in EU for example. The tech definitely exists, the same way battery tech existed before Tesla. Hydrogen makes more sense for trucks as it's lighter, and by outsourcing manufacturing most of the risk is removed.
PS Email me if you are interested in building a hydrogen powered flying vehicle.
Just outsource everything even outsourcing itself. Why do you even have company, you can just sit in your basement and order a bunch of trucks from another company have some contractor put new stickers on it and ship them to costumers.
Pay somebody else to set up the fuel station, do the repairs and so on. The costumer service you outsource to India.
You don't even need more then 1 employ, you can chill while that employ does all the outsourcing.
I'm sure that company would be bigger then Apple soon. I mean no labor cost, no capx and a huge market. What a genius move.
I have mixed feelings on this. Nikola has a Theranos vibe to it. On the other hand, "Citron Research" has created stock crashes on shaky ground in both Shopify and Tesla using hit pieces with claims that didn't pan out. I'm not sure if it is a stopped-clock is right twice a day thing, or if this is a poker strategy adding to EV by mixing in bluffs with solid poker hands.
Companies that spend time agitating about short sellers have a straightforward way of shutting them down: proving they are a legit, going concern and bankrupting shorts.
That's the nature of the game when you're trying to sell shares. It's on you to prove you are a real company. The SEC requirements are because prior to them companies lied all the damn time and got away with it
Nikola isn’t really an innovator in my view. They take what’s out in the market and assemble them which is not really that practical when it comes to manufacturing vehicles. This is like me saying I have an automobile company for nuclear powered trucks. And they should be valued as such.
There are a lot of electric car manufacturers putting in real work such as Bollinger Motors.
I just don't see the case for hydrogen over battery? It surely can cost less, but I see battery pricing dropping every year. In the 20 year timeframe, is hydrogen still a big win over batteries? Is there something fundamental about the technology that makes storing hydrogen better than batteries?
I see batteries not getting much cheaper at all, and likely hitting some plateau in cost reductions. It wouldn't surprise me if it is followed by cost increases as demands for sustainable production and recyclability increase.
Hydrogen is not just cheaper than batteries, but fundamentally cheaper in a way that batteries can never match. For instance, underground storage is at the cents per kWh of storage. So batteries can never get there. In 20 years, I suspect FCEVs will have taken over, with BEVs mostly abandoned as being too expensive to justify their existence in most circumstances.
Fundamentally I agree that FC storage can be very cheap. Just a metal tank with some valves or whatever, right?
a) What stops the fundamentals of batteries from also continuing to get cheaper? Current batteries are using less of some expensive metals, is there some kind of law that is going to make us hit a wall at current battery pricing? I don't see this yet, nor have I seen research papers, but I may have just missed them?
b) The way I understand it, is the cost of creating the Hydrogen is the expensive part now. Is there proof that it will be cheaper with time, and that the end state of producing hydrogen is cheaper than the end state of producing batteries?
You need a lot of metal, especially if you want a big battery. Realistically we're not going to see batteries much cheaper than what we have now.
Hydrogen is likely to be cost of green energy plus some additional cost factor. So if solar is $0.02/kWh, then hydrogen will be maybe 2x that in the very long run. Everything points to hydrogen eventually getting to around $1/kg, or cheaper than just about any other kind of fuel.
It's amusing to see Tesla stans hate on Nikola, when the two companies' characteristics and tactics are almost identical. Any criticism that applies to Nikola applies to Tesla, and vice versa. If anything, Nikola is moving more quickly than Tesla did early in its 17 year history.
When somebody decides to 'cash out' their reputation by conning people for years, I can't be sympathetic to their whining about nobody trusting them anymore. That's how reputation works and there's nothing unfair about it.
Fool me once, shame on you. Fool me twice, shame on me.
Second chances are for people who make mistakes, not for people who engage in fraud and deception. If you give me the shaft consciously and knowingly, it's a long road to get my trust back.
Interesting to compare against Lucid Motors. Founded thirteen years ago and still not shipping, dismissed as vaporware for so long, yet are now surprising people by getting production versions of their car to early reviewers.
I watched some videos of Trevor Milton. He has ZERO signs he is faking
HOWEVER
A) Just because someone's body language and presentation is PERFECT doesn't mean they are telling the truth. They might have convinced themselves of the lie
B) The Truck Video is SUPER DODGY. It's shot from an angle that makes it impossible to tell what the incline angle is. It could VERY easily be just a truck with no engine rolling down a slight incline
C) The walkthroughs etc. Trevor Milton does are SUPER DODGY.
Elon Musk with Tesla talks about crazy things that might never happen (Full Auto Pilot Level 5 Driving) but half of the crazy stuff he DELIVERS
Trevor Milton seems to be just as good as Musk at promising things, but so far has not delivered anything
*
On the one hand, it would be great if Nikola delivers a great truck
Competition for Tesla
Death to these parasitic short sellers
ON THE OTHER HAND
Don't see what exactly is the VALUE Nikola is providing. GM is building everything. So is Nikola's contribution selling a great story ???
It's like Musk's ability to sell stories, but lacking Musk's abilities to
A) get subsidies from the government
B) actually deliver products
Trevor Milton and Nikola are getting money from the stock market. That comes with a lot of dangers which government contracts and subsidies do not
I listened to the CEO talk for an hour about their dedicated route hydrogen business model for trucking, and it actually seems like a good idea. The thesis is that 25% of trucks drive back and forth on the same route for their entire lifetime, so you pick the busiest route, build a hydrogen station on it, and sell a bunch of trucks to use it at capacity.
This avoids the chicken and egg problem of building thousands of stations everywhere before you can sell your first vehicle.
I don't know anything about the industry, and I wouldn't trust their ability to execute, but the plan itself seems sensible. As the renewable grid share increases, there's going to be a bunch of excess capacity at times that can be used very cheaply, meaning the end to end efficiency of hydrogen may not be a deal breaker. Without a multiple of current battery energy density, long range BEV trucking will be tough.
Then there's the Badger/GM partnership. They got Iveco to make their trucks, and now they're getting GM to make their pickup. It makes me wonder if their strategy is going to be permanently outsource manufacturing and try to be a Pepsi to Tesla's Coke, partnering with traditional manufacturers which are able to build vehicles technically, but lack the modern sexiness of the new crop of BEV car makers.
But if they do pull any of this off, it's going to go down as one of the greatest fake it til you make it examples in modern history. They probably did bullshit their way in to this market cap - I wouldn't be surprised if every word of the short seller report is true. But the market cap does opens doors.