11.30.20 - Nikola shares plunged more than 20% after news broke that General Motors is giving up its equity stake in Nikola Motors and scrapping plans to build the electric truck maker's Badger pickup as part of a new, scaled-back deal between the companies.
The new deal replaces an agreement announced earlier this year in which GM had planned to take an 11% stake in Nikola and supply the startup with equipment for its highly anticipated hydrogen fuel cell trucks. GM had also previously stated it would build Nikola's pickup, the Badger.
Shortly after that deal was announced, a short seller released a damaging report making allegations of fraud against Nikola and its then-chairman, Trevor Milton. Nikola disputed the report.
In the wake of the allegations, GM reminded investors that it had not yet closed the deal with Nikola. The new deal, which was announced Monday morning, is still just a memorandum of understanding, not a final deal. Under this deal, GM will simply be a supplier to Nikola.