Has Nikola’s Founder’s Fraudulent Activity Changed the EV Conversation?


by Martin Banks



Commercial Zero-Emission Vehicle Investors Challenged, But Industry Moves On

Globally, countries have fast-tracked their electric vehicle (EV) manufacturing to combat rising emissions and meet the 2 C standard of the Paris Climate Agreement. Then Nikola’s Founder’s fraudulent activity was uncovered, and the conversation surrounding EVs has changed for better or worse.

Now they’re rolling under their own power

In the United States, transportation accounts for 27% of greenhouse gases—the largest source of emissions of any sector. The call for a low to zero-emissions alternatives is loud and clear, especially since 91.6% of Americans own one to three vehicles per household.

Today’s vehicle manufacturing companies have ramped up domestic EV production and are exploring the latest roadway innovations. The revelation that not everyone is putting the environment over profit caused a “disturbance in the Force,” as some might call it.

Uncovering Nikola’s Lies

Nikola initially set out to produce low and emission-free semi-trucks. The company gathered support from industry veterans, showed off concept vehicles, gathered provisional purchase orders, cut deals with companies as large as General Motors, and went public via a special purpose acquisition company (SPAC) in mid-2020. However, shockwaves rumbled through the EV industry in 2021 as founder and executive chairman Trevor Milton faced fraud charges for duping investors into buying the company’s stock.

According to the U.S. Securities and Exchange Commission (SEC), Milton communicated false information and product misrepresentations to drive investor shares, including misleading statements about fully functioning trucks the company hadn’t completed. Additionally, Milton was accused of funneling millions of dollars for personal use.

Trevor Milton
Trevor Milton (in 2017, image from Wikipedia)

Nikola was outed by activist short-seller Hindenburg Research after it received a whistleblower tip about Milton’s corporate wrongdoings. Current employees often make the most reliable whistleblowers with their birds-eye view of poor workplace conduct and fraud schemes.

Unfortunately for Nikola, several employees came forward during Hindenburg’s investigation. For example, whistleblowers highlighted that Nikola’s promotional video of its low-emissions truck prototype only moved because it was rolling downhill in neutral gear.

In October, 2022, Milton was found guilty on three of four counts of fraud. He will be sentenced in January 2023. He faces up to 25 years in prison. Nikola was not part of the Milton trial, but the U.S. Department of Justice and the SEC brought related civil charges against the company, which were settled when Nikola agreed to pay a $125 million fine.

The case against Nikola has since served as a warning sign for investors to be wary of funneling money into companies without revenue or a final product.

Investors’ caution weeds out bad players, but it also makes it more challenging for start-up EV makers to garner financing to begin production. This is happening amid struggles to overcome manufacturing obstacles, raw materials shortages and the uptick in conventional battery-powered cars.

Semi-Trucks: The Next Wave of EVs

Investors might be more prudent in future EV investments, but demand shows little sign of slowing down.

The Biden administration recently set an ambitious goal for half of the nation’s new car sales to be electric, fuel cell and hybrid by 2030. If the U.S. meets that goal, EVs will make up 60%-70% of all vehicles on roadways by 2050.

Tesla Semi
The Tesla Semi is coming–finally

Nikola may have been onto something meaningful with its so-called focus on EV semi-trucks. Even with all it’s gone through, Nikola has managed to produce and deliver 93 battery-electric semis. We know the exact number because they all were recalled to correct a seat belt anchor issue in Sept. 2022. Other companies are filling in the gaps.

For example, Freightliner developed the eCascadia semi for regional distribution, which gets 230 miles of range and will charge to 80% charge in 1.5 hours — Walmart began testing these trucks in 2022. Volvo produces the VNR Electric, a vehicle that gets 275 miles of range with the ability to hit an 80% charge in under an hour. Peterbilt and Navistar also have electric semis either planned or ready to be delivered.

Commercial EV drivers shouldn’t aim for a 100% charge to avoid degrading the battery and requiring electrical maintenance.

Current EV semi-trucks aren’t practical for long-hauling due to significantly lower range than diesel-powered trucks and a lack of charging infrastructure (Semis with a trailer can’t fit into most light-duty oriented charging stations), but Tesla may offer a partial solution. In October 2022, Elon Musk announced the company’s Tesla Semi will start production, with PepsiCo Inc. due to receive first in December as part of a California state-funded demonstration program. The Tesla Semi should reach 500 miles on one charge and cost half the amount of fueling a diesel truck.

Progress Continues in EV Technology

Not even fraudulent activity at Nikola can stop progress in EV production. With numerous companies behind today’s most innovative clean transportation technology, the world is on track to having growing emissions-free traffic on the roadways.

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