Shares of Nikola Corporation (NKLA) surged 18% on Friday after the electric vehicle truck maker said that it made its first customer deliveries. Separately, Nikola received an order for 100 EV trucks from Heniff Transportation. The start of customer deliveries is a bullish development for the EV company and 2022 could be a comeback year for shares of Nikola!
Nikola’s commercial prospects just improved significantly- 2022 could be a good year for Nikola if the electric vehicle company continues to ramp up deliveries of its battery-electric vehicle trucks/BEVs and sticks to its production plan. Nikola tweeted on Wednesday that it made its first Nikola Tre battery-powered electric truck delivery to Total Transportation Services Inc.
Total Transportation Services, a Californian port trucking company, signed a Letter of Intent for the delivery of 100 Nikola Tre electric trucks back in May 2021. Nikola’s deal with Total Transportation Services includes a pilot project that requires the delivery of two BEVs and two fuel-cell electric vehicle trucks/FCEVs. When the pilot project gets completed successfully, the Letter of Intent calls for 30 BEV deliveries in FY 2022 and 70 FCEV deliveries in FY 2023.
Additionally, Nikola said that it signed another Letter of Intent with Heniff Transportation systems last week for delivery of another 100 Nikola Tre BEVs. Initially, Nikola will only deliver 10 BEVs. Once these BEVs are successfully integrated into the company’s transportation fleet, Nikola will deliver another 90 zero-emission trucks to the company. Deliveries for the initial 10 BEVs will take place in the first half of FY 2022.
The start of customer deliveries is a big accomplishment for every EV company, but especially for Nikola which had to deal with allegations of overpromising achievements. It also faced an investor exodus after its founder was confronted with fraud accusations. With the first Nikola Tre delivery taking place, the electric vehicle maker keeps its promise to commence with deliveries in Q4’21.
A settlement with the SEC – Nikola got into hot water with regulators last year after the company and key personnel at the company made misleading statements about the technological capabilities of the company’s first-ever production truck. Trevor Milton, the founder, and CEO of Nikola had to step down from his position and was indicted on fraud charges. These events significantly harmed the reputation and valuation of Nikola.
Nikola is accepting its role in making misleading statements that were made to investors during FY 2020. The EV company just agreed to settle civil fraud charges for $125M which, however, will not have to be paid immediately: Nikola will pay the settlement in five separate installments over two years. While Nikola’s founder still faces criminal charges in court, the settlement agreement closes an unfortunate chapter in Nikola’s history. The total settlement sum represents about 21% of Nikola’s available cash at the end of the September quarter.
Nikola Long (Buy)
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