The allegations include falsely claiming to have extensive proprietary technology, fabricating promotional material, and passing off third-party components as in-house products.
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Update, 22 September: Nikola’s founder and chairman, Trevor Milton, has stepped down following the recent allegation of fraud levelled at his company.

Former Vice Chairman of General Motors, Stephen Girsky, will replace him.

“Focus should be on the company and its world-changing mission, not me,” Mr Milton said in an official statement.

“I made the difficult decision to approach the Board and volunteer to step aside as Executive Chairman.”

Nikola stock dived 29 per cent almost immediately following the news, and now trade at US$27.50 (AU$38.20).

At the beginning of this month – before the controversy, and following the announcement of a $2 billion partnership with GM – stocks traded as high as US$50.05 (AU$69.30).


September 17: The United States Department of Justice has opened an investigation following a report from a research firm – known for casting doubts on other businesses for its own financial gain – made serious allegations against hydrogen-electric vehicle maker Nikola.

The report, from the aptly-named Hindenburg Research, alleges a collection of "recorded phone calls, text messages, private emails, and behind-the-scenes photographs" show Nikola to be a deceptive and fraudulent venture.

Hindenburg Research also alleges Nikola chairman Trevor Milton misled partners into signing agreements by falsely claiming to have extensive proprietary technology, as well as fabricating promotional material to give the impression rolling-chassis mockups were fully operational vehicles, but instead used a third-party powertrain rather than in-house technology.

However, the organisation has used a financial instrument known as 'short-selling' to position itself to profit should Nikola's stock price go down.

Hindenburg's claims come just days after General Motors acquired an 11 per cent stake in the project for an estimated US$2 billion (approximately AU$2.7 billion). At that time Nikola had a market capitalisation of around US$20 billion (AU$27B).

Nikola has fired back at the accusations: "[The report is] designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short sellers, including Hindenburg itself," the manufacturer said in a statement.

Hindenburg does have a financial incentive to tarnish the reputation of Nikola, with its own report contains the following disclaimer embedded in the article: "Hindenburg Research along with our clients and/or investors has a short position in all stocks covered herein, and therefore stands to realise significant gains in the event that the price of any stock covered herein declines".

In fact, analysis of the Hindenburg Research website suggests that this is a sustained business model – the company uses financial instruments to bet on a company's stock losing value before publishing disparaging accusations.

Nikola's legal council have now contacted and briefed the US Securities and Exchange Commission (SEC) on the matter, which it says is investigating the matter.

Despite this, the report may have implicated Nikola in potentially deceptive practices.

Responding to the allegation that 2018 footage of the Nikola One Electric Semi Truck simply showed a rolling chassis being pushed down a hill, the company now argues that it never intended for viewers to believe the vehicle was functional.

"Nikola never stated its truck was driving under its own propulsion in the video," the company said in a statement.

"As Nikola pivoted to the next generation of trucks, it ultimately decided not to invest additional resources into completing the process to make the Nikola One drive on its own propulsion."

The US Department of Justice has opened their own investigation into the allegations of fraud.

On September 4, 2020 Nikola shares traded at US$35.55 (AU$48.60), and, following the next-day announcement that GM was investing in the company, they shot-up to US$50.05 (AU$68.40). They have since dropped to as-low-as US$29.11 (AU$39.80) with the release of the Hindenburg report.

The company's market capitalisation has now plummeted to around US$13.6 billion (approximately AU$18.6B).

CarAdvice has contacted both parties for comment, and will update this story with their responses.

General Motors recently reported it would be building Nikola Badger all-electric pick-up truck, thanks to the partnership. It will complete against the Tesla Cybertruck, Rivian R1T, and Lordstown Endurance in the all-electric pick-up segment.

According to the Nikola, the Badger ute will produce up to 675kW and 1329Nm, and will have a 965km range. Production is expected to begin in 2022.

Watch the Nikola One 'in motion' promotional footage below.