GM, Nikola override strategic partnership with new hydrogen fuel cell agreement

Vehicle manufacturers General Motors and Nikola have overridden their previous plans for GM to buy an equity stake in Nikola with an agreement for the global supply of GM's Hydrotec fuel cell system for Nikola's commercial semi-trucks.

In September, the two companies had announced a strategic partnership, with GM to pay $2 billion for an 11% ownership in Nikola, as well as the development of the Nikola Badger for both the battery electric vehicle and fuel cell electric vehicle variants.

However, the companies said Nov. 30 that they had signed a new non-binding memorandum of understanding, which did not include the previously contemplated GM equity stake in Nikola or development of the Nikola Badger.

Nikola's shares dropped around 25% Nov. 30 on the news, with the company also adding that the Nikola Badger program was dependent on an OEM partnership and it had would refund all previously submitted order deposits for the Nikola Badger.

Under the new MOU, the companies said GM would potentially engineer its Hydrotec fuel cell system -- GM's hydrogen/commercial vehicle powertrain technology -- to mutually agreed specifications for installation in Nikola's Class 7 and Class 8 zero-emission semi-trucks for the medium- and long-haul trucking sectors.

A binding agreement is still subject to negotiation and execution of definitive documentation acceptable to both parties.

The two parties said they were still discussing the appropriate scope of services that GM would provide for the integration of the fuel cell system into Nikola's vehicles, although they expected the potential arrangement to be on a cost plus basis, with Nikola paying upfront for the capital investment for the capacity.

GM's said it would be engineering the Hydrotec system at its Michigan technical facilities in Pontiac and Warren, and manufacturing it at its Brownstown Charter Township battery assembly plant.

Nikola said it expected to start testing production-engineered prototypes of its hydrogen fuel-cell powered trucks by the end of 2021, with testing for the beta prototypes expected to begin in the first half of 2022.

The two manufacturers said they would also discuss GM potentially supplying its Ultium battery system for Nikola's Class 7 and Class 8 trucks.

GM's Ultium battery and propulsion technology was unveiled in March, with large-format, pouch-style cells using a proprietary low cobalt chemistry able to be stacked vertically or horizontally inside the battery pack, allowing engineers to optimize battery energy storage and layout for each vehicle design and reducing battery costs.

GM executive vice president of global product development, purchasing and supply chain Doug Parks said providing GM's Hydrotec fuel cell systems to the heavy-duty class of commercial vehicles was "an important part of our growth strategy and reinforces our commitment toward an all-electric, zero-emissions future."

Nikola CEO Mark Russell said the agreement provided an opportunity to leverage the resources, strengths and talent of both companies.

"Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market," Russell said. "We believe fuel-cells will become increasingly important to the semi-truck market, as they are more efficient than gas or diesel and are lightweight compared to batteries for long hauls. By working with GM, we are reinforcing our companies' shared commitment to a zero-emission future."