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Electric Truck Startup Nikola Refutes Fraud Allegations, but This Fight Is Just Getting Started

After spending much of the summer being the poster child for booming new electric vehicle startups, and then inking a multibillion-dollar production deal with General Motors, would-be EV truck company Nikola found itself on the defensive following bombshell accusations of fraud and technological incompetence. These claims were leveled by Hindenburg Research, a self-described “forensic financial research” firm that’s also taken a short position against Nikola’s now publicly-traded stock. On Monday, Nikola executive chairman and founder Trevor Milton issued a rebuttal of the explosive claims, but it’s raising even more questions about what’s going on behind the scenes.


Not all of the allegations from Hindenburg are even addressed, but there’s at least one instance of Nikola admitting that Hindenburg was right on a major charge: it really did roll a non-running truck down a hill for the misleading “in motion” video released in 2018.


Nikola’s statement said the Hindenburg report “was designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short-sellers, including Hindenburg itself.” It has also referred the case to the U.S. Securities and Exchange Commission. The company maintains it is on track to make battery-electric semi-trucks available to customers by the fourth quarter of 2021. Last week Milton also lashed out against the firm on Twitter, drawing parallels to Tesla’s Elon Musk, another EV charismatic startup executive unafraid of lobbing bombs on social media, often to his own detriment.


But today, Hindenburg Research released its own response to Milton’s response, putting the two entities in a war of words that may end up getting settled in a courtroom. Let’s run down the highlight reel of allegations.
Using Google Maps data, Hindenburg Research managed to track down the location for the Nikola One’s splashy promo video and discovered that it was filmed on a long, shallow downhill stretch of road in Utah. A test performed with a rental car in neutral showed it was possible to roll from a dead stop and get up to 56 mph over the 2-mile stretch, making it a pretty open-and-shut case that Nikola sent a nonfunctional roller coasting down the hill and pretended like it was driving.
But now Nikola has acknowledged that’s true-sort of. The “feature-complete”-sounding response admits that a nonfunctional prototype truck was rolled down the hill, though it farms out responsibility for the decision to an unnamed “third party” production team. But in a bit of wordplay, it claims the company never actually said the truck was driving, pointing to the specific use of the phrase “in Motion” in the title.
From the statement:
“Nikola described this third-party video on the Company’s social media as ‘In Motion.’ It was never described as ‘under its own propulsion’ or ‘powertrain driven.’ Nikola investors who invested during this period, in which the Company was privately held, knew the technical capability of the Nikola One at the time of their investment. This three-year-old video of a Nikola prototype is irrelevant except for the fact that the short seller is trying to use it for its main thesis. The fact is, Nikola has real working hydrogen fuel-cell powered semi-trucks.”
The Nikola One show truck pany’s December 2016 unveiling was also non-functional. But the company claims that it’s all a semantic debate because Nikola One powertrain components had been bench tested before the decision was made to redirect resources away from making it move under its own power, so the prototype was “designed to work,” which is not the same thing as actually working.
This was first reported by Bloomberg earlier this summer, leading to legal threats from Nikola against the news service.


Hindenburg also claims dummy animations were loaded onto the screen, and hydrogen decals were applied to the truck despite it being designed to run on natural gas. So not only was the vehicle mechanically non-functional, much of the technology inside was not complete either. But speaking of hydrogen…
The Hindenburg report also accused the company of nepotism, sayin…
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