GM will collaborate with Nikola Motors on developing battery-electric and hydrogen-electric vehicle technologies.
GM and Nikola just announced a new partnership, and following the declaration, General Motors‘ stock price surged by 7.3 percent on Tuesday, September 8, compared to the last trading day. The stock started trading at $31.72 and closed on the same day at $32.38, with a peak of $33.33.
Nikola Motors’ shares also increased by 41% on Tuesday. The market value of GM stands at $46.34 billion after the gain, while Nikola is at $18.97 billion.
The first product resulting from this partnership will be Nikola’s electric Badger pickup truck, likely to go into production in 2022.
GM’s addition to the partnership will be to provide its Ultium battery system and Hydrotec fuel-cell technology to Nikola for its upcoming vehicles. It will also undertake the manufacturing of Nikola’s Badger truck’s battery-electric and fuel-cell variants. To settle the agreement, GM is entitled to $2 billion in newly-issued common stocks and an 11% stake in Nikola.
Furthermore, GM is aiming to start its electric vehicle programs quickly. Therefore, they require technologies from other companies to minimize costs and streamline the production process. Just last week, General Motors also entered another partnership with Honda.
Moreover, the American carmaker has laid out its plan for its upcoming electric vehicles. The four-year project includes a Chevrolet EV pickup truck, a midsize Chevy electric car, an electric van, five electric Cadillac models, two GMC Hummer EVs, and two electric Buick crossovers.
“Nikola is the second partner to choose our modular EV platform and Ultium battery system over competitors’ technology,” GM CEO Mary Barra said on a media call following the Nikola announcement. “Through these partnerships, we are growing our presence in multiple high-volume EV segments. We’re building scale to lower battery costs … this will also lead to increased profitability.
GM anticipates benefits from this collaboration worth $4 billion in terms of the equity value of the share, contract manufacturing of the Badger, and upcoming supply contracts for batteries and fuel cells.
“With General Motors becoming a partner for the Nikola Badger and leveraging the General Motors Ultium battery technologies and fuel cells, this will allow Nikola to achieve things that it could never do on its own,” Nikola founder and executive chairman Trevor Milton said. “I don’t know if you can pick a better partner in the world than GM on this, ever.”