General Motors is acquiring an 11% stake in electric truck maker Nikola in a deal worth about $2 billion. The companies will join forces to build an electric pick-up truck. Shares of Nikola soared on the news.
Together, they plan to launch production of the Nikola Badger pick-up truck by the end of 2022. GM will make the electric battery and fuel cells for that truck. Nikola will give GM $2 billion in stock and the right to name one director to its board.
The truck will compete with Tesla’s Cybertruck, as well as electric pickups planned by startup Rivian, Ford Motor and GM itself. Nikola claims the Badger will have a range of 600 miles, compared with Cybertruck's claimed range of more than 500 miles. The Cybertruck and other electric pickups have not launched yet.
GM has been busy doing deals to slash expenses and develop cleaner vehicles. Just last week, it announced it’s partnering with Japan’s Honda Motor to develop new internal combustion models. CEO Mary Barra is rushing to convince Wall Street that GM can cut costs in its traditional internal combustion business while developing a viable electric vehicle business to compete with Tesla.
Investors liked what they heard, driving GM shares up 8% and Nikola’s up 40%.