General Motors is taking an 11% stake in the electric vehicle startup Nikola Corp. and will manufacture its planned Badger pickup truck, the companies said Tuesday.
Why it matters: It's the latest vote of confidence for Nikola, which is among a number of startups that have been attracting significant capital and investor interest before making any profits or vehicles.
- It also shows how legacy automakers are increasingly teaming up with startups as they position themselves to compete in emerging electrified transport markets.
The impact: Nikola, which is planning both the pickup and a line of semi trucks, was up 32% in pre-market trading, while GM was up 7%.
The big picture: GM will receive a $2 billion equity stake in Nikola and will become a key technology supplier for the startup.
- "Nikola will utilize General Motors' Ultium battery system and Hydrotec fuel cell technology," the companies said.
- GM will be the "exclusive supplier" of fuel cells (outside of Europe) for the semi trucks Nikola is planning.
What they're saying: The companies said the "strategic partnership" will yield financial benefits for both companies.
- Nikola, which went public in June, said it expects to save over $4 billion in battery and powertrain costs over a decade.
- GM, meanwhile, expects to see over $4 billion in benefits via the value of its shares in Nikola, the contract for manufacturing the Badger pickup, contracts for batteries and fuel cells, and more.
