The GM-Nikola announcement says no cash will pass from GM to Nikola. Instead, GM will make its fuel cell and battery technology available to Nikola, provide in-kind services and build under contract the company’s lone consumer model, the Badger, by 2022. No money out of GM’s pocket, right? Not hardly.
Red flags abound here. GM, tied up with its own aggressive $20 billion EV and autonomous vehicle program, has plenty on its plate to keep its own engineers busy. Even though the deal calls for Nikola to pay GM as much as $700 million for production costs, GM will have to devote its resources and factory space to Nikola at a time when it is launching an array of incredibly complex vehicles.
A contract manufacturer, such as Magna Steyr, takes a completely engineered, tested and validated vehicle and builds it to the specifications of its customer, the automaker. Magna assembles the Jaguar I-Pace electric crossover, for example, at its plant in Graz, Austria. Contract manufacturers do not carry out product development work, validate components or test systems. In contract manufacturing, if a component doesn’t fit or work properly, it’s on the automaker to fix it.
Does Nikola have the capability to design, test and deliver to GM a pickup that is ready to be mass-produced in less than two years? Nothing in Nikola’s past suggests it does. The company has never delivered anything more than test-mule trucks and currently has nothing in production.
It takes years for automakers to create vehicles from the ground up. Ford has been working on the Bronco for at least the last five years. Rivian announced its R1T electric pickup in the spring of 2018, but design and development work started long before that. R1T deliveries don’t begin until next spring — and that’s if everything goes right.
One more thing: GM plans to sell Nikola its proprietary fuel cell technology and new high-performance Ultium batteries. On the surface, that looks like a smart deal. GM will drive its own costs down as its volume goes up. But that could also be a real minefield. If Nikola engineers don’t get the installation, thermal management systems and charging protocols correct, it could sully GM’s reputation.
