Nikola stock plunges as electric garbage truck deal trashed

Republic Services had agreed to purchase at least 2,500 refuse trucks

Nikola Corp. shares were sharply lower Wednesday morning after the company said its collaboration with Republic Services to develop an electric refuse truck had been suspended.

The deal, which was the largest single order in the waste industry, called for Republic to purchase at least 2,500 electric trucks with the option to increase the order size to 5,000. Republic is one of the largest recycling and solid waste collectors in the U.S.

Ticker Security Last Change Change %
NKLA NIKOLA CORP. 10.24 -0.11 -1.06%
RSG REPUBLIC SERVICES INC. 134.76 -0.56 -0.41%

“This was the right decision for both companies given the resources and investments required,” Nikola CEO Mark Russell said in a statement.

The companies said new technologies and design concepts would take longer to develop and cause the project to cost more than previously expected. The initial cost of the project was never disclosed.

The cancellation of the project is a “'gut punch’ for investors that were hoping this monster order was a potential paradigm changer,” wrote Dan Ives, an analyst at Wedbush Securities.

Nikola, alongside the announcement, said it expects to begin deliveries of its Tre battery-electric semi-trucks next year. The company also plans to break ground on its first commercial hydrogen station in 2021 and to begin production on fuel-cell-electric semi-trucks at its Arizona plant in 2023.

The breakdown of the collaboration with Republic is Nikola’s second major deal to collapse over the past month.

A partnership with General Motors to develop the Badger pickup truck fell apart on Nov. 30. General Motors also sidelined plans to take a $2 billion equity stake in Nikola, although the two companies signed a revamped agreement that could lead to GM providing hydrogen fuel cell technology.

Nikola’s earlier agreement with General Motors came under scrutiny after short-seller Hindenburg Research released a detailed report accusing the company of fraudulently presenting its technology to investors. The report led founder Trevor Milton to resign as CEO and to a U.S. Securities and Exchange Commission investigation.

Nikola shares debuted on the Nasdaq on June 4 at $42 apiece and were down 61% through Tuesday.