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JPMorgan ‘skeptical’ about GM producing Nikola badger pickup

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Nikola Motor Firm

Supply: Nikola Motor Firm

JPMorgan is “skeptical” about Nikola finalizing a cope with Normal Motors to provide an electrical pickup truck referred to as the Badger for the embattled automobile start-up.

As a substitute, JPM analyst Paul Coster expects the 2 firms to renegotiate a beforehand introduced $2 billion deal with out the Badger, specializing in GM supplying Nikola with battery and gas cell applied sciences for its giant business vans – the cornerstone of its operations.

“(Nikola’s) CEO has been constantly non-committal relating to the Badger initiative, in our view, and we’re skeptical that it’s going to proceed provided that it is not a strategic initiative for Nikola and it may drain the corporate of money wanted for the Class eight truck initiatives,” Coster stated in an investor observe Wednesday.

Throughout an interview Tuesday on CNBC’s “Mad Cash with Jim Cramer,” Nikola CEO Mark Russell stated negotiations with GM had been ongoing. He stated the corporate stays “” within the automaker’s applied sciences, however reiterated that Nikola is not going to promote the Badger – a shopper automobile in contrast with semitrucks – with no associate to provide it.

“It has to have a enterprise case,” Russell stated. “It is bought to have the ability to be one thing that is sensible for our shareholders. And we have to have a associate. It is not in our core plan. If you happen to have a look at our core plan, that is about heavy truck and hydrogen … which is why we stated from the start it takes a associate. So, we’ve got a associate, it is in play. If we do not have a associate, it is not.”

A GM spokesman declined to touch upon the negotiations Wednesday apart from the “transaction has not closed, and there’s no new info” to report.

Coster stated JPM has a “sense that each GM and Nikola have cause to renegotiate the deal; Nikola might need to drop the Badger partnership, GM might want extra inventory to compensate for the diminished scope.” If not finalized by Dec. 3, both facet can walkway kind the pact.

Shares of Nikola had been down as a lot as 17.4% throughout buying and selling Wednesday morning. As of about midday, they’d barely rebounded to $30.65 per share, down 11.2%.

The Sept. Three deal was initially considered as a no-lose state of affairs for GM. The partnership would give the Detroit automaker an 11% stake within the firm for supplying Nikola with battery and gas cell applied sciences in addition to producing the Badger pickup.

Two days after the announcement, brief vendor Hindenburg Analysis launched a damning report accusing founder and ex-Chairman Trevor Milton of constructing false statements concerning the firm’s know-how to draw buyers and partnerships with different automakers. It characterised Nikola as an “intricate fraud constructed on dozens of lies” by Milton, who dismissed most of the claims earlier than resigning in September.

The allegations within the report have led to inquiries by the Division of Justice and Securities and Alternate Fee.

— CNBC’s Michael Bloom contributed to this report.

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