Trevor Milton said his company is now focused on delivering on Twitter. He noted that precisely after one of the most eagerly anticipated deliveries from Nikola Motor Company until now: its replies to all accusations made by Hindenburg Research, point by point.
The document released by Nikola starts by saying that that report's "opportunistic timing" "was designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short-sellers," such as Hindenburg.
It also reinforces that Hindenburg will probably be sued for its allegations and that the US SEC (Securities and Exchange Commission) is already involved to clarify all points raised by the financial research company.
That said, here are the explanations from Nikola about the most important topics raised by Hindenburg Research:
GM made a deal with Nikola out of desperation:
To answer that, Nikola says it has been through "extensive due diligence processes, starting with Bosch in 2017, Hanwha Group and ValueAct Capital in 2018, CNH Industrial NV in 2019, and VectolQ Acquisition Corp. and General Motors in 2020." No serious company gets involved with others without these processes, and it would be indeed strange if GM had not taken significant precautions before getting involved with Nikola.
There is no Nikola Tre in pre-production:
Trevor Milton himself has addressed this one on September 11.
The company said in its document that it expects the Tre to be ready for delivery in 2021.
Nikola has no functioning prototype for the Nikola One, Two, or Tre:
Nikola shared the video below to show the Nikola Two delivering a beer freight on hydrogen for Anheuser-Busch in November 2019.
Nikola mentions Bosch said Hindenburg Research misquoted one of its employees about saying there is no Tre produced so far. According to Bosch, that was out of context, and "the employee spoke only about Bosch's own plans for the IAA industry show and H2Haul project for the European Union."
The Nikola One was conceived to be fully functional, even if it wasn't. It had a working gearbox, batteries, inverters, power steering, suspension, infotainment, air disc brakes, high voltage, and air systems, according to the company. Some components, such as the gearbox and inverters, were tested on a bench before the prototype was revealed.
What happened to that truck was that the company "decided not to invest additional resources into completing the process to make the Nikola One drive on its own propulsion." In fact, it evolved into a version of the Nikola Two: a longer one, with a sleeper. And the Nikola Two drives, as the video above shows.
In that sense, the video that shows the Nikola One driving rolling down a big hill was not meant to deceive anyone, according to Nikola.
It would have been just "showcased and filmed by a third party for a commercial" in a time when the company was privately held. The investors at that time "knew the technical capability of the Nikola One at the time of their investment." In other words, Nikola admits it did not run on itself, claims it never said so ("in motion" did not mean it was moving on its own), and that it had no financial consequences to any of the investors.
Nikola does not produce inverters in-house:
Nikola said it never claimed to have produced the inverters in its prototypes, but that it is "designing, engineering, and working on its own inverters for quite some time." According to Nikola, it does use third-party components in its prototypes, which does not mean they will be in the production trucks. It also said it protects the names of its suppliers "from the view of media and competitors."
Nikola does not have groundbreaking technology on batteries:
Nikola says it does and that they do not come from ZapGo Ltd., but rather from "an ongoing confidential R&D partnership with a leading academic institution." If this technology was connected to ZapGo, why would the company insist it will be revealed at the Nikola World 2020? It even says it "is excited about potential breakthroughs related to its next-generation battery technology." As we mentioned in a previous article, this could be another benefit GM could get from a partnership with Nikola.
Nikola hired Travis Milton to be "Director of Hydrogen Production/Infrastructure" because he is Trevor's brother:
The company says Hindenburg depicted talented employees in a bad light. Travis would be the director of hydrogen infrastructure because he "previously owned and operated his own construction company." That would have prepared him for "hydrogen station infrastructure and buildouts."
The company also mentions Kevin Lynk, a "talented mechanical engineer" who is currently its chief engineer, and Dale Prows, who has "over 30 years of experience in supply chain and purchasing in the petrochemical and aluminum industries." He is currently Nikola's Head of Infrastructure Development.
Lynk was mentioned by Hindenburg as a paintball machine repair technician, according to his LinkedIn profile. He was also a wedding DJ and MC while he was making a living during his engineering course, but Hindenburg did not bring that up against him. Nikola argues he is "specialized in computational fluid dynamics (CFD), finite element analysis (FEA), computer-aided design (CAD) and product data management (PDM)."
Prows is qualified as a "CEO of a residential golf course in Idaho" by Hindenburg, which was his last job listed at his LinkedIn profile. Still, the same page confirms the experience Nikola claims he has.
The company also mentions that its former CFO termination had nothing to do with refunding Nikola One reservations; that Hindenburg is wrong about its capacity to produce hydrogen; that the NZT development program is still ongoing; and that its current contracts are solid.
Nikola dismisses any importance given to a competitor's opinion that its fuel cell technology is "hot air." Yet, it does not mention why it has decided to use GM's Hydrotec fuel cell technology in its trucks. It also says it will not answer to "dozens more inaccurate allegations" because they "are not relevant to Nikola."
Finally, Trevor Milton said he did not erase his tweets:
Nonetheless, a tweet we have embedded on our first article about Nikola’s response to Hindenburg Research is missing.
Nikola seems to have adequately addressed some of the accusations, made some of them debatable, and overseen some, such as what it is bringing to the table with its GM deal. Will that be enough to make the stock market forget about the Hindenburg Research report? What will the SEC do in this case? Will Nikola really sue the financial research company? We'll follow that closely to keep you posted.