Published on September 9th, 2020 📆 | 6524 Views ⚑0
Analysts React To GM-Nikola Partnership
it’s taking a billion stake in the hydrogen fuel cell electric truck maker. As part of the companies’ new partnership, GM will produce Nikola’s first Badger truck model starting before the end of 2022.” data-reactid=”19″>Shares of General Motors Company (NYSE: GM) and Nikola Corporation (NASDAQ: NKLA) rallied on Tuesday after GM announced it’s taking a billion stake in the hydrogen fuel cell electric truck maker. As part of the companies’ new partnership, GM will produce Nikola’s first Badger truck model starting before the end of 2022.
GM now has an 11% ownership stake in Nikola and will have the right to nominate one Nikola board member. GM will also supply Nikola’s fuel cells in every market other than Europe, and Nikola will use GM’s Ultium battery platform system.
on CNBC, GM CEO Mary Barra said the deal with Nikola is a “wonderful validation of our technology” as the company competes for market share in the next-generation EV and autonomous auto market.” data-reactid=”21″>In an interview on CNBC, GM CEO Mary Barra said the deal with Nikola is a “wonderful validation of our technology” as the company competes for market share in the next-generation EV and autonomous auto market.
“We view this deal very positively for GM as we believe the unit economics are very favorable for the automaker (high margins and ROIC), and the partnership further positions its Ultium battery as a scalable industry wide platform that can pool together large volumes from several OEMs to improve costs,” Rosner wrote in a note.
Bank of America analyst John Murphy said the partnership “affirms GM’s leading powertrain technology.”
“Despite a still challenging macro backdrop, GM’s core business is being managed very well, with a laser focus by management on the company’s most profitable franchises (trucks, SUVs, CUVs, North America, China), decisive actions to address underperforming segments (GME sale, restructuring in Korea/China), and ongoing execution of the company’s longer-term product/business vision, with the NKLA partnership being just the latest example,” Murphy wrote.
CFRA analyst Garrett Nelson said the Nikola deal is a bullish signal that GM’s balance sheet is healthy despite a difficult auto environment, but GM’s auto sales likely won’t be returning to pre-crisis levels anytime soon.
“Overall, we think the partnership makes sense and should be mutually beneficial to both parties,” Nelson wrote.
“This news is a huge shot in the arm for Nikola and cements credibility not just for its Badger production slated to begin by the end of 2022 but for its hydrogen fuel cell ambitions and semi truck vision going forward,” Ives wrote.
RBC Capital Markets analyst Joseph Spak said Nikola is now positioned to reach full Badger production capacity of around 50,000 vehicles per year in 2024.
“[The] strategic partnership not only brings Badger to serial [production], but increases investor confidence in NKLA’s plan while de-risking [its business] model through another strong partnership,” Spak wrote.
RBC Capital Markets has a Sector Perform rating and $49 target for Nikola.
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