Nikola Motor lays off 15% of its workforce

US truck manufacturer Nikola Motor has announced that it let 135 of its employees go last Wednesday. The company's stocks continue to drop as the company struggles to maintain profitability despite delivering 88 fuel cell trucks in Q3.

Despite being the only manufacturer to put fuel cell trucks on the road last quarter, the financial situation around Nikola Motor seems to be quite dire. This round of layoffs was preceded by 270 employees being let go in June 2023, which was further preceded by another 100 employees in November 2022. At the end of 2023, former CEO Trevor Milton was also sentenced to prison over fraud.

In addition to the layoffs, another indicator of Nikola’s struggle can be found in its stock prices, which are the third most shorted stock on Wall Street at the moment, with a short interest of 29%. Nikola already executed a reverse stock split in June, hoping to boost the share price to keep it listed on the Nasdaq, which requires a share price of at least $1 for 30 consecutive days to maintain its listing. Before the split, the shares had traded at 30 cents per share.

The announcement of the sales of the 88 fuel cell trucks briefly boosted stock prices by nearly 20%, however, the next day, it dropped 6.5% and has been mostly declining since. According to the publication Freightwaves, it is estimated that each truck costs Nikola over $1 million to manufacture, while the revenue stands at $380,000. This is not a sustainable business model for obvious reasons. Nikola’s move to sell and lease back its Phoenix headquarters also injected much-needed short-term funds, however, may cost the company dearly in the long run.

This year’s second quarter saw Nikola posting a quarterly loss of over $133 million, although the company maintained a positive attitude due to increasing sales numbers: ” We expect this revenue stream to grow as volume increases each model year,” Nikola wrote in a press release at the time.

Despite the continued setbacks, Stephen Girsky, CEO of Nikola, still maintains a positive attitude about the company’s future: “Despite overall market headwinds, Nikola remains focused on our mission to pioneer solutions for a zero-emission world, and we’re doing it one truck at a time.”

freightwaves.com