Nicola’s GM deal shows a new way to bring electric vehicles to market


Tesla is the first successful American car brand to come together in decades. But compared to how their younger rivals are operating, Elon Musk’s game plan now looks completely old-school.

The carmaker was founded 17 years ago during a period when electric vehicles were considered an incredibly risky undertaking. By 2010, Tesla had developed enough momentum to stage an initial public offering, giving approximately $ 260 million – a paltry sum, hundreds of millions, even billions, which EV Startups recently pulled is.

Tesla then had to manufacture vehicles, sell them and generate revenue (and, from time to time, profits). It faced many crises along the way. But in 2020, after an epic stock-market rally, it became the most valuable automaker.

New car companies paid attention to the Tesla story and attempted to follow a less unexpected path. Heinrich Fisher, who established a rivalry with Tesla with Fisher Automotive in 2010 before going bankrupt in Operation 2013, is back with a new brand, Fisker and a different business model.

SPAC is a matter of

Trevor milton

Trevor Milton, founder of Nicola, has joined GM.

Massimo Pinka / Reuters


Fixer went public earlier this year through a special purpose acquisition company (SPAC) founded by private-equity firm Apollo Global Management. The transaction, effectively a merger, led to a $ 3 billion valuation for Fisher, a listing on the New York Stock Exchange, and $ 1 billion in funding for Faker to build its Ocean EV, which in 2022 Production should be recorded. (In short, a SPAC is a fund created specifically to buy a company. SPAC’s IPO lists the target acquisition to avoid traditional IPO roadshows, in which investment bankers give the company to investors. )

Fixer later signed a memorandum of understanding to manufacture the vehicle, the largest contract manufacturer, Magna International. (Magna manufactures a few cars for the likes of BMW and Jaguar Land Rover.)

Nicola has employed the same playbook, but with a twist. The electric-truck-focused startup also went public through an SPAC and briefly minted a $ 13 billion market cap. It has revealed a wide range of vehicles from pickup trucks to semi, but nothing has come anywhere to produce.

But on Tuesday, Nikola revealed that he formed a partnership with General Motors. The largest US automaker from the sale said it would serve as a contract manufacturer for the Nikola Badger pickup and contribute fuel-cell powertrain technology to Nikola’s heavy-cargo trucks. GM also took a $ 2 billion equity stake in Nicola, echoing investments made in self-driving startup Cruise and ride-healing company Lyft.

GM will build the Badger using a new EV platform and its Ultium battery technology, which it revealed in early 2020. (GM did not provide details on the plant that would receive the vehicle, but production is slated by the end of 2022.)

Nicola founder Trevor Milton said on a conference call with the media after the news announcement, “Avoiding the construction of a factory saved us billions.” “It was a big fear for us. But now the bomb, we’re in production.”

Nicola is moving forward on plans to build a factory for its semitrack.

GM CEO Mary Barra said that “the industry is changing” and said that creating a vehicle platform with Ultium was a huge opportunity the company intends to leverage to the fullest. The company is not yet deploying Ultimate with the startup. Last week, it said it was exploring an extended partnership with Honda.

The trade-off for Nicola and Fisker is that at least for some vehicles, they will not integrate vertically to technologies that automakers have traditionally wanted to build for themselves as much as possible: powertrains. Tesla, for example, has a battery-manufacturing partnership with Panasonic, but controls the battery and powertrain design.

For pickup, Milton is happy to give it to him. And Fixer, in several interviews with Business Insider after the company’s listing was completed, has emphasized that new automakers may not be preoccupied with building their own vehicles.

Cars are easy to produce and less expensive

GM EV Barra

GM CEO Mary Barra has stated that GM’s Ultium technology will define an electric future.

GM


“Fischer Automotive faced incredible hardship,” he said in early 2010 about efforts to build his karma. “Tesla were honest about production hell, and they had a ton of money. It’s really hard to build a car. So I wanted to question whether this method really should be.”

His realization led Fixer to an asset-light business model, presenting it as a solution to the age-old challenge of the auto industry: burning through huge amounts of cash to bring cars to market.

A pattern has emerged: Startups get established and showcase their designs, raise funds through SPACs, and sign up with more experienced and capable manufacturers to make those designs into real vehicles that consumers Can buy

This process looks much more closely to the way Apple makes iPhones. In GM’s case, the Ultium EV is a type of operating system that can be plugged into several brands, with Nicola and Honda being just two examples. Fixer has taken the approach even further, focusing solely on manufacturing outsourcing and user experience.

“After 30 years in the car business, I stepped out on my own,” Fixer said. “I did not see Apple CEO Tim Cook walking on a construction floor.”