Chevrolet maker General Motors has signed a partnership deal for a $2 billion equity stake in electric truck startup Nikola. The deal will give GM an 11% stake in Nikola. In return, GM will offer services in kind, giving Nikola access to its parts and components. The transaction, subject to regulatory approvals, will take place on September 30, 2020.
Under the deal, GM will engineer and manufacture the Nikola’s Badger electric pick up and exclusively supply of fuel cells for the startup’s class 7 and 8 trucks globally. The partnership will turbocharge GM’s commercialization of its battery system as Nikola will use its Ultium battery and hydrotec fuel cell technology.
“By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence,” says Nikola Founder and Chairman Trevor Milton in a press release.
The strategic partnership will save the electric truck startup approximately $5 billion in engineering and manufacturing related expenses. Nikola expects to save $ 4 billion in battery and powertrain costs over the next ten years and over $ billion in validation and engineering costs.
On the other hand, the deal will give GM over $ 4 billion in benefits from equity shares, supply contract for batteries, EV Credits and manufacturing contracts for the Nikola Badger.
News of the new partnership drove share prices for both Nikola and GM.