Comment: Regulatory changes and Nikola troubles

Logistics operator Biagi Bros took delivery of 10 Nikola Tre FCEVs in February, 2024 (Photo: Biagi Bros)

Battery-electric vehicle (BEV) and hydrogen fuel cell-powered heavy-duty truck OEM Nikola might be reaching the end of the road, at least in its current form.

A series of media outlets are reporting that the company is now ‘exploring options’, which could include selling elements of the business, or the company as a whole.

Alternatively, Nikola could try and source new investment capital. But with its share price hitting a new low (January 23, $0.76), it would be a brave move to sink more cash into the ailing business.

More dramatically, a limited number of reports have put forward that Nikola CEO Stephen Girsky is to leave and the company will file for bankruptcy.

According to Reuters, Nikola had liquidity of about $198 million as of the end of September last year. This compares to about $464 million at the end of 2023.

The truck maker has had its problems. In 2022, company founder Trevor Milton was found guilty of fraud after presenting misleading statements about Nikola’s technology development, largely to secure new investment. Milton will have to pay the company $167.7 million after an appeal against the award was dismissed in September 2024.

There have been other problems, too. The battery-electric trucks were recalled in 2023 due to faults with the battery packs and in 2024, issues with instrument panels prompted another recall.

ACF withdrawal

In January this year, the California Air Resources Board (CARB) withdrew its Advanced Clean Fleets (ACF) waiver request related to the EPA’s Clean Air Act.  Had it come into effect, this would have seen truck fleet operators in California required to purchase an increasing number of zero-emissions vehicles to replace diesel-powered models.

It was reported that the ACF waiver request was withdrawn due to it being overly ambitious and unworkable over the given timeframe. But there is also the likelihood that the EPA would have denied the request, in no small part due to changing priorities of the new Trump administration.

So while truck operators will no longer be required to purchase expensive replacements for aging diesel fleets, the Advanced Clean Trucks rule remains in place. In broad terms, this rule states that each year, OEM sales totals must feature an increasing proportion of zero-emission vehicles.

Had they both been passed the two rules would have been largely complementary, setting up a ready market for the new-power trucks. But with fleet operators now under no obligation to invest in clean technology, which comes at a considerable cost over standard diesel, OEMs must be wondering where they will sell their new, highly R&D-intensive models.

That all brings us back to Nikola, which produces the Tre BEV and FCEV heavy-duty trucks. In 2024, the company is reported to have sold 235 FCEVs; in Q3 2024 the business reported selling 88 units, a new record.

Clearly, there are still trucking companies in California planning to reduce their respective carbon footprints with the purchase of low- or zero-emission vehicles, but the withdrawal of the ACF rule request will see an end to any market pull beyond that supported by good intentions.

All of this could compound the ongoing problems at Nikola. The company had targeted selling between 300 and 350 units by the end of 2024. The 235 sold was well short of that number.

Viewed two dimensionally, the ACF could have been seen as just another regulation intended to move forward California’s green agenda. But accurate as that may be, it would have also created a captive market for heavy-duty new-power BEVs now being produced by a series of OEMs.

Nikola has clearly had its issues and it won’t be the first - or the last - EV/FCEV startup to fold (should that happen). But it’s possible the ACF rule would have served as a driver of new sales volumes and with it, security for any new investment. With the new-power heavy-duty truck market now more uncertain than ever, the withdrawal of the request could mean that time is up for Nikola.