Electric Vehicle Startup Nikola Files for Chapter 11 Bankruptcy Protection

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Following a string of financial difficulties, Nikola seeks to restructure its operations


Nikola, the American electric vehicle startup, has officially filed for Chapter 11 bankruptcy protection as of February 19. This move comes after the company experienced a significant cash shortfall and continued difficulties in securing new funding. Following the announcement, Nikola's stock plummeted by 47% in pre-market trading, hitting an all-time low of $0.40, just a day after a remarkable 41% surge in its stock price.

Founded in 2015, Nikola gained recognition as a manufacturer of hydrogen trucks and made its public debut in June 2020. The company delivered its first vehicle in December of the following year. However, Nikola's journey has been fraught with challenges, especially following allegations made by short-seller Hindenburg Research. The firm accused Nikola of misleading investors regarding its vehicle capabilities, leading to legal troubles for the company's founder, who faced federal fraud charges.

In the past year, Nikola attempted to ramp up production of hydrogen fuel cell electric trucks but struggled to secure the necessary funding. The company has faced mounting losses, with reports indicating that it incurred hundreds of thousands of dollars in losses per vehicle sold, further depleting its cash reserves. According to court documents, Nikola's assets are valued between $500 million and $1 billion, while its liabilities are estimated to be between $1 billion and $10 billion.

Despite these financial hurdles, Nikola announced plans to continue operations related to some on-site truck activities and hydrogen fuel supply until the end of March. The recent bankruptcy filing follows similar actions taken by other innovative electric vehicle startups, including Lordstown Motors in 2023 and Fisker and Proterra in 2024, as high interest rates and dwindling capital for capital-intensive businesses have led to financial turmoil in the industry.

Over the last two years, Nikola has repeatedly warned of significant doubts about its ability to continue as a going concern, citing ongoing losses and cash shortages in its financial statements. This troubling trend reflects the broader challenges faced by electric vehicle startups in a rapidly evolving and competitive market.

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