Nikola EV Recall Sends Stock Tumbling

Key Takeaways

• Nikola, an electric truck manufacturer, has discovered a flaw in many of its battery packs that requires a fix
• The company is recalling all 209 of the battery-electric semi trucks it has sold
• Nikola stock plummeted on Monday after the recall announcement

A coolant leak in a battery pack has caused Nikola, a truck manufacturer, to lose its footing on the stock market in a big way. We wish we could say it was the company’s first issue, but, unfortunately, Nikola has really been struggling lately. Between this malfunction, disappointing earnings, and executive turnover — this is a company that’s been getting the wrong kind of attention.

We’ll explain what exactly is going on with the recall and how investors are reacting.

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What went wrong at Nikola?

In June, a faulty battery pack caused a fire in a Nikola EV truck — specifically the Class 8 Tre battery model — near the the company’s headquarters. The fire spread to other trucks and caused serious damage. Vandalism was initially suspected, but a third-party investigation found a coolant leak in the battery pack.

Separately, another truck with the same type of battery pack malfunctioned in August (thankfully that one didn’t catch on fire).

Nikola has stopped sales of these battery-electric trucks until they get a repair on the market. The company has simultaneously recalled 209 of its Class 8 Tre battery electric trucks.

Nikola makes a newer truck model, a semitruck powered by a hydrogen fuel cell, which will be unaffected by the recall. Those trucks are in production now and are scheduled for September delivery.

How is Nikola’s stock?

The trucks are on fire and the stock is….not.

Shares fell about 20% Monday after the start of regular trading. This is just the most recent in a string of hits to Nikola’s share price. The company announced the departure of its CEO earlier this month as well as disappointing results for the quarter.

Right now, too many things seem amiss at Nikola, and the market is rightfully wary.

The bottom line

We love a comeback story, and Nikola might have one, but we simply aren’t betting on it. The company has been through scandal (the founder was ousted for fraud), instability (changing leadership), and now a recall as its product quite literally went up in flames.

With such an increasingly crowded EV landscape, we really think only the strongest will thrive.

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