Nikola Corp. announced that the company is no longer developing an electric garbage truck with waste management firm Republic Services.
Why it matters: It's the latest of several setbacks in recent months for Nikola, the once high-flying battery electric and hydrogen fuel cell truck company that went public mid-year in a reverse merger. Republican had placed a preliminary order for at least 2,500 vehicles in August.
Driving the news: "[B]oth companies determined that the combination of the various new technologies and design concepts would result in longer than expected development time, and unexpected costs," Nikola said in a statement.
Catch up fast: The announcement comes three weeks after General Motors dropped plans to take an equity stake in Nikola and build its Badger pickup truck, a vehicle that's now mothballed.
- Under their revised agreement, GM will still be a key tech supplier for Nikola's planned line of electric and fuel cell heavy trucks.
- More broadly, Nikola has faced a rocky road in recent months. Founder and executive chairman Trevor Milton stepped down in September following allegations over misleading or inaccurate statements.
Our thought bubble: Via Axios transportation reporter Joann Muller...This is a reminder to investors who have scooped up newly minted stock in various electric vehicle startups this year that searching for the next Tesla is a risky proposition.
Nikola might yet succeed in hydrogen fuel cell trucks — its original idea — but the sky-high valuation assigned by Wall Street was based on hype. Investors beware: an EV bubble is a real possibility.
What they're saying: Wedbush Securities analyst Dan Ives, in a note, called the cancelled garbage truck order a "'gut punch' for investors that were hoping this monster order was a potential paradigm changer for Nikola."
- But Nikola, in the announcement, emphasized that's plans for semi-trucks are going forward, including a target to begin U.S. deliveries of its Nikola Tre model next year.
- "Nikola remains laser-focused on delivering on our battery-electric and fuel-cell electric commercial truck programs, and the energy infrastructure to support them," CEO Mark Russell said in a statement.
Go deeper: Wall Street is searching for electric vehicle gold
