Nikola Founder Sentenced to Jail in Fraud Case
Former CEO of Nikola, Trevor Milton, has been sentenced to four years in jail for his involvement in a fraud case related to the electric truck manufacturer. Milton had falsely claimed that Nikola had developed its vehicle from scratch, leading investors to believe in the company's technology. In addition to the prison sentence, Milton has also been ordered to pay a fine of $1 million.
False Claims and Accusations
The fraud case, which took place in the United States, accused Milton of providing misleading information about Nikola's capabilities. One of the false claims made by Milton was that the company had built the Nikola One electric truck from the ground up. The prosecution also accused him of staging a video that purportedly showed the truck driving under its own power, when in reality it was rolling down a hill.
Rise and Fall of Nikola
Founded in 2015, Nikola aimed to produce zero-emission big rigs using hydrogen fuel cell technology. The company gained attention when General Motors announced its plans to acquire an 11% equity stake in Nikola in 2020. GM also committed to assisting Nikola in manufacturing its battery-electric and hydrogen fuel cell vehicles. However, Nikola's upward trajectory came to a halt when Hindenburg Research released a report accusing Milton of fraud, including the deceptive video of the Nikola One truck. The report also alleged that Milton falsely claimed to produce hydrogen fuels at below-market rates and obtained billions of dollars in truck orders.
Consequences and Fallout
The damning report from Hindenburg Research had severe consequences for Nikola. General Motors quickly withdrew from its planned equity purchase, and Milton stepped down as the board chair and CEO. The report also triggered a federal investigation, leading to Milton's arrest. As a result of the crisis, Nikola scaled down its operations, and in 2021, it halted work on its electric ATV and motorboat project. The discontinuation of these projects is estimated to have cost Nikola around $14 million.
No Official Response Yet
As of now, neither Nikola nor Trevor Milton has issued an official response to the fraud case ruling. It remains to be seen if there will be further developments in this case.
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