Nikola shares soar 20% premarket on news of GM partnership; GM to receive $2 billion in Nikola stock

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General Motors Co. and Nikola Corp. said Tuesday they are entering a strategic partnership that will start with the Nikola Badger, the company’s planned fully-electric and hydrogen fuel cell electric pickup truck, and include cost reductions for other models. As part of the agreement, Nikola will use GM’s Ultium battery system and Hydrotec fuel cell technology. Nikola will exchange $2 billion in new stock for in-kind services and access to GM’s parts and components. GM will have 11% ownership of Nikola and the right to nominate one director to its board. GM will engineer and manufacture the Nikola Badger, which is expected to enter production by the end of 2022. Nikola expects to achieve $4 billion in savings on battery and powertrain costs over 10 years and another $1 billion in engineering and validation costs. GM expects to receive more than $4 billion in benefits between the equity value of the shares, contract manufacturing of the Badger, supply contracts for batteries and fuel cells and EV credits. GM will be exclusive supplier of fuel cells globally to Nikola for Class 7/8 trucks. Nikola shares jumped 20% premarket on the news, while GM was up 6%.
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