General Motors CEO Mary Barra defended the company’s decision to partner with Nikola Motors on Monday, days after short-seller Hindenburg Research accused the upstart electric vehicle firm of conducting an “intricate fraud.”
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Speaking at the RBC Capital Markets Global Industrials Virtual Conference, Barra said GM performed the “appropriate diligence” prior to closing its $2 billion transaction with Nikola. GM acquired an 11 percent stake in the electric vehicle maker and agreed to manufacture the Nikola Badger, a full-size pickup truck, using its own fuel cell and battery technology.
The U.S. Securities and Exchange Commission has opened a probe into the allegations against Nikola, Bloomberg reported. The SEC declined to comment on the situation.
“On September 11, Nikola’s legal counsel proactively contacted and briefed the U.S. Securities and Exchange Commission (SEC) regarding Nikola’s concerns pertaining to the Hindenburg report. Nikola welcomes the SEC’s involvement in this matter," the company said in a statement.
Hours before the SEC's probe came to light, Barra said GM's strategic partnership with Nikola "validates" the automaker's technology.
“It allows us to have more people using the technology, which gives us the advantage of scale, which will help us drive costs down," Barra said. "And then from a fuel cell perspective, using the Hydrotec fuel cell technology, and entering a new segment for us, a growth segment, again validating our fuel cell technology, I think it starts to unlock an all-new growth area for us as it relates to fuel cells.”
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Barra declined to comment further on the allegations against Nikola and directed questions to that company’s management.
After spiking on news of the GM partnership, Nikola shares plunged last week in response to Hindenburg Research’s scathing report post on its operations, titled "Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America.”
The firm accused Nikola and its leadership of misleading investors and argued the company is an “intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton’s career.”
In one instance, Hindenburg claimed that Nikola faked a January 2018 video that appeared to show the Nikola One semi-truck driving down a highway and “simply filmed it rolling down the hill.”
Nikola shares bounced back in trading Monday after the company issued a lengthy dismissal of Hindenburg Research’s claims.
“Nikola believes that the Hindenburg report, and the opportunistic timing of its publication shortly after announcement of Nikola’s partnership with General Motors Co. and the resulting positive share price reaction, was designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short sellers, including Hindenburg itself,” the company said in a statement.
This story has been updated.