Nikola(NKLA) - 2024 Q4 - Annual Report

Explanatory Note Nikola Corporation filed for Chapter 11 bankruptcy on February 19, 2025, leading to debt acceleration, Nasdaq delisting, and a confirmed Plan of Liquidation that cancels all equity interests for no value - Nikola Corporation and certain subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Code on February 19, 2025[9] - The bankruptcy filing constituted an event of default, accelerating obligations under the company's convertible notes[10] - Nikola's common stock was suspended from trading on Nasdaq on February 26, 2025, and delisted effective April 14, 2025. The company intends to file a Form 15 for deregistration[11] - A Plan of Liquidation was filed on June 23, 2025, and confirmed by the Bankruptcy Court on September 5, 2025. This plan provides for the liquidation of remaining assets, creation of a liquidation trust, and dissolution of the company[12][13] - Pursuant to the Plan of Liquidation, all common stock and equity securities will be cancelled by order of the Bankruptcy Court, and holders will not receive any distribution[14] - The company has sold substantially all of its assets and ceased business operations, including truck manufacturing and sales, since April 2025, and is in the process of winding down[15] Forward-Looking Statements This section highlights that the report contains forward-looking statements based on management's current expectations and assumptions, which are subject to significant risks and uncertainties, including the company's pending bankruptcy and liquidation. Actual results may differ materially - The report contains forward-looking statements identified by words such as 'believe,' 'may,' 'will,' 'expect,' and similar expressions, which predict future events or trends[17] - These statements are based on various assumptions and current management expectations and are not predictions of actual performance[17] - Forward-looking statements are subject to risks and uncertainties, including the Company's pending bankruptcy proceedings and liquidation, that could cause actual results to differ materially from those expected[18] PART I Item 1. Business Nikola Corporation operated in two business units: Truck (FCEV and BEV Class 8 trucks) and Energy (hydrogen fueling infrastructure under the HYLA brand). The company commenced commercial production of Tre BEVs in Q1 2022 and Tre FCEVs in Q3 2023. However, as of April 2025, the company has ceased business operations and sold substantially all assets due to bankruptcy Company Overview Nikola Corporation focused on commercializing hydrogen fuel cell electric vehicles (FCEV) and battery electric vehicles (BEV) Class 8 trucks, alongside developing hydrogen fueling infrastructure under the HYLA brand. Production of BEVs started in Q1 2022 and FCEVs in Q3 2023 at its Arizona facility - Nikola operated in two business units: Truck (commercializing FCEV and BEV Class 8 trucks) and Energy (developing hydrogen fueling infrastructure under the HYLA brand)[22][24] - Commercial production of Tre BEVs began in Q1 2022, and Tre FCEVs in Q3 2023, both at the Coolidge, Arizona manufacturing facility[23] Shift to Zero-Emission Vehicles Nikola aimed to address the environmental impact of diesel vehicles, which are a major source of air pollutants and GHG emissions, by promoting zero-emission vehicles (ZEVs) as a viable solution to meet climate and regulatory targets - Diesel vehicles are a major source of harmful air pollutants and U.S. greenhouse gas (GHG) emissions, negatively impacting health and quality of life[25] - Zero-emission vehicles are considered a viable option to reduce emissions in the transportation sector and meet climate, ozone, and regulatory targets[26] - There is a strong global consensus among governments to shift to zero-emission vehicles and eventually eliminate internal combustion engine (ICE) vehicles[26] Zero-Emission Vehicle Incentive Programs Various incentive programs, such as California's HVIP and New York's NYTVIP, were crucial for lowering the upfront and operational costs of zero-emission vehicles, including Nikola's Tre FCEV and BEV trucks, which qualified for significant incentives and tax credits - Vehicle-specific incentive programs like California's HVIP and New York's NYTVIP were expected to play an important role in the adoption of zero-emission vehicles[27] - Nikola's Tre FCEV qualified for HVIP incentives of $240,000 to $288,000 per truck in 2024, and the Tre BEV was eligible for $120,000 to $150,000[28] - Purchasers of Tre BEV and FCEVs also qualified for an additional $40,000 in clean commercial vehicle tax credits from the federal government starting in 2023[28] - The loss or absence of these grants, credits, or incentives could have a material adverse effect on demand for Nikola's trucks and its business[30] Industry and Competition The Class 8 heavy-duty truck industry is highly competitive and evolving towards zero-emission solutions due to new regulations and technological advancements. Key competitive factors include total cost of ownership, reliability, fueling infrastructure, and service quality. Nikola faced competition from both traditional OEMs and new entrants, many of whom had greater resources - The Class 8 heavy-duty truck industry is highly competitive, driven by new regulatory requirements for vehicle emissions, technological advances, and shifting customer demands towards zero-emission solutions[32] - Primary competitive factors include total cost of ownership (TCO), reliability, availability of charging/refueling networks, service quality, product performance, emissions profile, and technological innovation[31][37] - Nikola faced competition from established OEMs (Daimler, Volvo, Paccar) and new entrants (Tesla, BYD, XOS, Lion) in the BEV market, and Hyundai, Toyota, Daimler, and Volvo in the FCEV market[35][36] - Most competitors possess greater financial, technical, manufacturing, marketing, and other resources than Nikola[34] Products Nikola offered two Class 8 truck models: the Tre BEV, designed for short and medium-haul with a range of up to 330 miles, and the Tre FCEV, targeted for medium missions up to 500 miles per fill, leveraging the BEV platform with hydrogen fuel cell technology - The Nikola Tre Class 8 BEV is a purpose-built zero-emissions truck with a range of up to 330 miles, designed for short and medium-haul markets in North America. Sales began in Q2 2022[38] - The Nikola Tre Class 8 FCEV uses hydrogen fuel cells, targeting medium missions up to 500 miles per fill and multi-shift operations. Sales began in Q4 2023[39][40] - The Tre FCEV leverages the Tre BEV platform with modifications for hydrogen fuel cell operation, improved aerodynamics, thermal management, and light-weighting[40] Nikola Energy Nikola Energy, under the HYLA brand, was developing a hydrogen fueling ecosystem in North America, encompassing hydrogen supply, distribution, storage, and dispensing. It also provided BEV charging solutions, focusing on mobile and fixed infrastructure - Nikola launched HYLA in January 2023 as its new brand for hydrogen energy products, comprising a planned hydrogen fueling ecosystem and integrated BEV charging solutions[41] - The hydrogen fueling ecosystem includes hydrogen supply (on-site, hub production, or third-party contracts), distribution (liquid, gas, dissolved hydrogen via various methods), and storage/dispensing (fixed heavy-duty stations and modular assets)[42][43][44][46][47] - BEV charging solutions focused on mobile charging trailers (MCTs) for remote testing and transitional charging, and fixed infrastructure development with end-user fleets and dealers[45][51][52][53] - The first HYLA 700 bar pressure hydrogen mobile fueler was commissioned in 2022, and the first modular station opened in Ontario, California, in Q4 2023[50] Sales, Service, and our Dealer Network Nikola employed an end-user-focused, integrated solution approach for sales, service, and parts. This included traditional marketing, direct fleet engagement, a training academy for technicians, and a dealer network for sales and maintenance, supported by predictive maintenance and over-the-air software updates - Nikola adopted an end-user-focused, integrated solution approach for delivering trucks, infrastructure, and support services, including market research and direct engagement with fleets[54][55] - The Nikola training academy, opened in December 2021, provides dealer technician training and certification for BEV and FCEV trucks[56] - Service solutions included smart predictive maintenance, over-the-air software updates, and a dealer network for maintenance and warranty work, with trained technicians and diagnostic technologies[59] - A sales and service dealer network was established in key metropolitan areas and major interstate highway intersections across the U.S.[57] Bosch Fuel Cell Supply Nikola had agreements with Robert Bosch LLC for the supply of fuel cell power module (FCPM) components and a license to adapt and assemble FCPMs for its FCEV trucks, effective through 2030 - Nikola entered a Fuel Cell Supply Framework Agreement with Robert Bosch LLC in August 2021 to purchase FCPM components from June 1, 2023, through December 31, 2030[58] - An FCPM Design and Manufacturing License Agreement with Bosch (September 2021) granted Nikola a non-exclusive license to intellectual property for adapting, developing, and assembling FCPMs for its FCEV trucks[58] - Bosch continues to supply FCPMs assembled in Germany to Nikola for its trucks[60] Manufacturing and Production Nikola's 670,000 sq ft manufacturing facility in Coolidge, Arizona, was designed with environmentally thoughtful features, including energy-efficient lighting, HVAC, and a solar array, utilizing modern energy-efficient equipment - Nikola's manufacturing facility in Coolidge, Arizona, is approximately 670,000 square feet and features state-of-the-art manufacturing technology[61] - The facility was designed with environmentally thoughtful features, including energy-efficient LED lighting, HVAC, industrial fans, day lighting, smart controls, low water use landscaping, and a 750 kW solar array[61] - The manufacturing process utilizes modern energy-efficient equipment, electric automated guided vehicles (AGVs), and electric forklifts[61] Intellectual Property Nikola protected its core technology and intellectual property through a combination of patents, trademarks, copyrights, trade secrets, and confidentiality agreements, focusing on vehicle powertrains (battery and fuel cell) and hydrogen fueling - Nikola's success depends on its ability to protect core technology and intellectual property through a combination of patent, trademark, copyright, and trade secret protection[62] - The company also uses confidentiality and invention assignment agreements with employees and consultants to control access to proprietary information[62] - Patents and patent applications cover vehicle and vehicle powertrain (including battery and fuel cell technology) and hydrogen fueling[63] Sustainability Sustainability was central to Nikola's mission of zero tailpipe emission vehicles, integrating sustainable principles into operations, systems, and management. The company had a dedicated sustainability team, performed materiality assessments, and integrated oversight into its corporate governance - Sustainability is inherent in Nikola's purpose-built zero tailpipe emission vehicles and integrated into its operations, systems, and management[64] - The company focused on avoiding emissions in heavy-duty transportation through clean technology and energy solutions, while also managing its operational footprint[64] - Nikola appointed a sustainability team lead, partnered for a materiality assessment, and integrated sustainability oversight into its sustainability, nominating, and corporate governance committee[65] Safety Nikola implemented a comprehensive health and safety management system, overseen by dedicated officers, covering employees and partners. This included contractor safety programs, routine internal inspections, and audits, resulting in ISO 9001, 14001, and 45001 certifications - Nikola's safety programs encompass employees and partners, with safety being critical in all phases of production, testing, validation, and use[66] - A health and safety management system is implemented, steered by the Head of Environmental Health and Safety and a Safety Officer[66] - Routine monthly internal inspections are conducted at all facilities, and internal audits of the Environmental Management System are performed[66] - The company achieved International Standards Organization (ISO) 9001, 14001, and 45001 certifications[66] Governance Nikola aimed for leadership in corporate responsibility through a Code of Business Conduct and Ethics and a Code of Ethics for Senior Financial Officers, supplemented by workforce training and a whistleblower program - Nikola's corporate governance is guided by a Code of Business Conduct and Ethics and a Code of Ethics for Senior Financial Officers, publicly available on its website[67] - Ethics policies are supplemented by workforce training courses on ethical standards and an Ethics and Whistleblower program for anonymous reporting of concerns[67] - Any concerns regarding accounting or auditing matters reported through these procedures are communicated promptly to the audit committee[67] Employees As of December 31, 2024, Nikola had approximately 940 employees, primarily in Arizona. Employee relations were favorable, with no external union representation, and the company actively complied with employment laws - As of December 31, 2024, Nikola had approximately 940 employees, with the majority located in Coolidge, Arizona, or the Phoenix metropolitan area[68] - None of the employees were represented by an external employee organization such as a union, and relations with employees were considered favorable[68] - The company actively sought to comply with all local, state, and federal employment laws and monitored labor and human capital management risks[69] Government Regulation Nikola operated in a heavily regulated industry, subject to extensive environmental, vehicle safety, and emissions regulations at international, federal, state, and local levels. Compliance was critical, with violations potentially leading to substantial fines or operational cessation - Nikola operates in an industry subject to extensive and increasingly stringent environmental regulations governing water use, air emissions, hazardous materials, and environmental protection[70] - Vehicles are designed to comply with numerous regulatory safety requirements established by NHTSA (FMVSS) and Canadian CMVSS[71][72] - The company is required to obtain a Certificate of Conformity for GHG from the EPA and an Executive Order for GHG from CARB, which it has received each model year since 2021[75][77] - Nikola's BEV and FCEV trucks received Executive Orders for Zero Emission Powertrain and Enhanced Zero Emission Vehicle from CARB since 2023, qualifying them for HVIP funding[78][79] - Battery packs conform with mandatory regulations for transporting 'dangerous goods,' including lithium-ion batteries, and are designed to meet and exceed UN Manual of Tests and Criteria compliance[81][82] Available Information Nikola's SEC filings, including annual, quarterly, and current reports, proxy statements, and other information, are publicly available on the SEC's website and the company's investor relations page - Nikola files annual, quarterly, and current reports, proxy statements, and other information with the SEC, available to the public at www.sec.gov[83](index=83&type=chunk) - SEC filings are also available free of charge on the Investors Overview page of Nikola's website at nikolamotor.com[83] Item 1A. Risk Factors Nikola has ceased business operations and sold substantially all assets, with its Plan of Liquidation confirmed by the Bankruptcy Court. All existing equity interests will be cancelled for no value, leading to a total loss for equity investors. Trading in common stock is highly speculative and may not reflect this pending cancellation - Nikola has ceased business operations and sold substantially all of its assets, and the Bankruptcy Court has confirmed its Plan of Liquidation[84][87][88] - On the Effective Date (expected December 2025), all existing common stock and equity securities will be cancelled for no value, and investors will lose their entire investments[89] - Trading in Nikola's common stock is highly speculative and may not reflect the pending cancellation of shares pursuant to the Plan of Liquidation[90] - The bankruptcy filings accelerated obligations under the company's convertible notes and led to the suspension and voluntary delisting of common stock from Nasdaq[85][86] Item 1B. Unresolved Staff Comments There are no unresolved staff comments - There are no unresolved staff comments[91] Item 1C. Cybersecurity Nikola implemented processes and controls for identifying, monitoring, assessing, mitigating, and managing cybersecurity risks, integrated into its overall risk management program. This included end-user training, security assessments, incident response plans, and engagement with third-party experts, with oversight from the Global Head of IT and the audit committee - Nikola implemented processes and controls for identifying, monitoring, assessing, mitigating, and managing potential cybersecurity risks, integrated into its overall risk management program[92] - The cybersecurity risk mitigation program includes end-user training, application security assessments, risk scores, security audits, and change review boards[92] - The security team, led by the Global Head of Information Technology, is responsible for cybersecurity practices and provides regular updates to the audit committee of the board of directors[94][95] - Nikola partners with third-party security vendors to conduct security assessments, penetration testing, and ongoing risk assessments[96] Item 2. Properties Nikola leased its headquarters in Phoenix, Arizona (over 150,000 sq ft), additional office space in Arizona, California, and Colorado, a service center in California, and eight parcels of land in California and Canada for refueling stations. Its manufacturing facility was leased in Coolidge, Arizona - Nikola leased its headquarters facility in Phoenix, Arizona, consisting of over 150,000 square feet[98] - The company also leased office space in Arizona, California, and Colorado, a service center in California, and eight parcels of land in California and Canada for refueling stations[98] - An approximately 400-acre parcel of real property in Coolidge, Arizona, where the manufacturing facility is constructed, is also leased[98] Item 3. Legal Proceedings Material pending legal proceedings are detailed in Note 13, Commitments and Contingencies, to the consolidated financial statements - A description of material pending legal proceedings is provided in Note 13, Commitments and Contingencies, to the consolidated financial statements[99] Item 4. Mine Safety Disclosures Not applicable - This item is not applicable[100] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Nikola's common stock was delisted from Nasdaq on April 14, 2025, and is now quoted on the Pink Market under "NKLAQ." As of April 28, 2025, there were 214 holders of record. The company has never paid cash dividends and has no current plans to do so, intending to retain future earnings for operations - Nikola's common stock was delisted from The Nasdaq Stock Market LLC on April 14, 2025, and is now available for quotation on the Pink Market under the symbol "NKLAQ"[103] - As of April 28, 2025, there were 214 holders of record of Nikola's common stock[104] - Nikola has not paid any cash dividends on its common stock to date and has no current plans to pay cash dividends for the foreseeable future, intending to retain future earnings for operations[105] Item 6. [Reserved] This item is reserved - This item is reserved[106] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Nikola's financial condition and results of operations for the year ended December 31, 2024, compared to 2023, focusing on continuing operations. It highlights the impact of the company's bankruptcy and pending liquidation on financial comparability and future outlook Overview Nikola operated in two business units: Truck (FCEV and BEV Class 8 trucks) and Energy (hydrogen fueling infrastructure under the HYLA brand). The company required substantial additional capital to fund operations and was impacted by a voluntary recall of BEV trucks in H2 2023 - Nikola operated in two business units: Truck (commercializing FCEV and BEV Class 8 trucks) and Energy (developing hydrogen fueling infrastructure under the HYLA brand)[108][109] - The company required substantial additional capital to manufacture and validate products, services, and fund operations, dependent on revenue, gross margins, and financing[111] - Commercial production of Tre BEVs began in Q1 2022 and Tre FCEVs in Q3 2023; however, BEV production and shipment were suspended in H2 2023 due to a voluntary recall[112] - Nikola accrued $57.4 million for BEV truck recall campaign costs, with $44.3 million incurred through December 31, 2024[113] Results of Operations Nikola experienced a significant increase in total revenues by 92% to $68.9 million in 2024, primarily driven by a 107% increase in truck sales. However, gross loss widened by 8% to $(230.4) million, and loss from operations increased by 41% to $(916.5) million, largely due to a $336.8 million impairment expense in 2024. Net loss from continuing operations increased by 11% to $(958.2) million Years Ended December 31, 2024 vs. 2023 (in thousands, except per share data) | Metric | 2024 | 2023 | $ Change | % Change | | :----------------------------------- | :------- | :------- | :------- | :------- | | Revenues: | | | | | | Truck sales | $62,210 | $30,061 | $32,149 | 107% | | Service and other | $6,652 | $5,778 | $874 | 15% | | Total revenues | $68,862 | $35,839 | $33,023 | 92% | | Cost of revenues: | | | | | | Truck sales | $279,854 | $242,519 | $37,335 | 15% | | Service and other | $19,434 | $7,387 | $12,047 | 163% | | Total cost of revenues | $299,288 | $249,906 | $49,382 | 20% | | Gross loss | $(230,426) | $(214,067) | $(16,359) | 8% | | Operating expenses: | | | | | | Research and development | $158,061 | $208,160 | $(50,099) | (24)% | | Selling, general and administrative | $191,212 | $198,768 | $(7,556) | (4)% | | Impairment expense | $336,758 | $— | $336,758 | NM | | Loss on supplier deposits | $— | $28,834 | $(28,834) | NM | | Total operating expenses | $686,031 | $435,762 | $250,269 | 57% | | Loss from operations | $(916,457) | $(649,829) | $(266,628) | 41% | | Other income (expense): | | | | | | Interest expense, net | $(22,824) | $(76,023) | $53,199 | (70)% | | Gain on divestiture of affiliate | $— | $70,849 | $(70,849) | NM | | Loss on debt extinguishment | $(6,004) | $(31,025) | $25,021 | (81)% | | Inducement expense | $(7,714) | $— | $(7,714) | NM | | Other expense, net | $(3,529) | $(162,163) | $158,634 | (98)% | | Loss before income taxes and equity in net loss of affiliates | $(956,528) | $(848,191) | $(108,337) | 13% | | Income tax expense | $71 | $12 | $59 | 492% | | Loss before equity in net loss of affiliates | $(956,599) | $(848,203) | $(108,396) | 13% | | Equity in net loss of affiliates | $(1,630) | $(16,418) | $14,788 | (90)% | | Net loss from continuing operations | $(958,229) | $(864,621) | $(93,608) | 11% | | Basic and diluted net loss per share | $(17.56) | $(32.42) | $14.86 | (46)% | | Weighted-average shares outstanding | 54,558,229 | 26,667,685 | 27,890,544 | 105% | Liquidity and Capital Resources As of December 31, 2024, Nikola's principal liquidity source was $104.3 million in cash and cash equivalents. The company's current assets were $265.1 million and current liabilities were $245.4 million. Management concluded that the Chapter 11 bankruptcy filing raises substantial doubt about the company's ability to continue as a going concern - As of December 31, 2024, Nikola's principal sources of liquidity were cash and cash equivalents totaling $104.3 million[136] - Current assets were $265.1 million (including $104.3 million cash and $71.8 million inventory), and current liabilities were $245.4 million (including $80.2 million SEC settlement and $24.9 million warranty reserves)[137][138] - Management concluded that the Chapter 11 bankruptcy petitions raise substantial doubt about the company's ability to continue as a going concern for 12 months following the issuance of financial statements[139] Summary of Cash Flow Data (in thousands) | Years Ended December 31, | 2024 | 2023 | | :------------------------------ | :------- | :------- | | Net cash used in operating activities | $(521,504) | $(496,178) | | Net cash used in investing activities | $(25,209) | $(66,749) | | Net cash provided by financing activities | $174,360 | $742,983 | - Net cash used in operating activities was $521.5 million in 2024, primarily due to a net loss of $958.2 million, partially offset by non-cash items like impairment expense ($336.8 million) and inventory write-downs ($88.0 million)[145] - Net cash provided by financing activities was $174.4 million in 2024, mainly from proceeds from common stock issuance ($144.1 million) and convertible notes ($80.0 million), partially offset by debt and lease repayments[149] Off-Balance Sheet Arrangements Nikola has not engaged in any off-balance sheet arrangements since its incorporation - Since the date of incorporation, Nikola has not engaged in any off-balance sheet arrangements[151] Critical Accounting Policies and Estimates Nikola's financial statements rely on significant management judgments and estimates, particularly for impairment assessments of long-lived and intangible assets, valuation of derivative liabilities, lease assumptions, revenue recognition, contingent liabilities (including litigation and warranty reserves), and stock-based compensation - Significant estimates and judgments involve impairment assessments for long-lived and intangible assets, valuation of derivative assets and liabilities, lease assumptions, revenue recognition, contingent liabilities (litigation, inventory, warranty reserves), and stock-based compensation[152][217] - Product warranty costs and recall campaign costs are recognized based on estimates of product failure rates, replacement costs, and required repairs, which are highly subjective and require significant management judgment[154][156][278][279] - Goodwill and indefinite-lived intangible assets are tested for impairment annually, and long-lived assets are reviewed when carrying values may not be recoverable. In 2024, a sustained stock price decline led to impairment charges for goodwill ($5.2 million), indefinite-lived intangible assets ($47.2 million), and long-lived assets ($284.3 million)[157][158][159][160][161][162][163][164][256][258][259][260][261][262][266][267] Recent Accounting Pronouncements Nikola adopted ASU No. 2023-07 on Segment Reporting effective December 31, 2024, with no material impact. The company is evaluating the impact of ASU No. 2023-09 (Income Taxes), ASU No. 2024-03 (Expense Disaggregation Disclosures), and ASU No. 2024-04 (Induced Conversions of Convertible Debt) for future periods - Nikola adopted ASU No. 2023-07, Segment Reporting, effective December 31, 2024, which increased required disclosures about reportable segments but had no material impact on financial condition or results of operations[293] - The company is currently evaluating the impact of recently issued accounting pronouncements, including ASU No. 2023-09 (Income Taxes), ASU No. 2024-03 (Expense Disaggregation Disclosures), and ASU No. 2024-04 (Induced Conversions of Convertible Debt Instruments), for future periods[294][295][296][298] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Nikola is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Nikola is not required to provide quantitative and qualitative disclosures about market risk[166] Item 8. Financial Statements and Supplementary Data This section presents Nikola Corporation's audited consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows for the years ended December 31, 2024 and 2023, along with accompanying notes. The financial statements are prepared assuming a going concern, despite the company's Chapter 11 filing Report of Independent Registered Public Accounting Firm (Grant Thornton LLP) Grant Thornton LLP, as the auditor since 2024, issued an unqualified opinion on Nikola's consolidated financial statements for the year ended December 31, 2024. However, they highlighted the Chapter 11 filing as raising substantial doubt about the company's ability to continue as a going concern. The critical audit matter identified was the liability for product warranties due to significant management and auditor judgment in estimating product failure rates - Grant Thornton LLP issued an unqualified opinion on Nikola's consolidated financial statements for the year ended December 31, 2024[170] - The audit report highlighted that the Chapter 11 filing on February 19, 2025, raises substantial doubt about the Company's ability to continue as a going concern[171] - The critical audit matter identified was the liability for product warranties ($53.2 million at December 31, 2024), due to significant management and auditor judgment in developing assumptions for expected product failure rates[176][177] Report of Independent Registered Public Accounting Firm (Ernst & Young LLP) Ernst & Young LLP, as the auditor from 2018 to 2024, issued an unqualified opinion on Nikola's consolidated financial statements for the year ended December 31, 2023 - Ernst & Young LLP issued an unqualified opinion on Nikola's consolidated financial statements for the year ended December 31, 2023[180] - Ernst & Young LLP served as the Company's auditor from 2018 to 2024[183] Consolidated Balance Sheets Nikola's total assets decreased from $1,274.9 million in 2023 to $596.2 million in 2024, primarily due to a significant reduction in cash and cash equivalents and impairment of property, plant, and equipment. Total liabilities decreased from $555.7 million to $488.8 million, while total stockholders' equity decreased from $719.2 million to $107.4 million Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------------ | :------------------ | | Assets | | | | Cash and cash equivalents | $104,302 | $464,715 | | Restricted cash and cash equivalents | $4,284 | $1,224 | | Accounts receivable, net | $33,381 | $17,974 | | Inventory | $71,847 | $62,588 | | Prepaid expenses and other current assets | $51,244 | $25,911 | | Total current assets | $265,058 | $572,412 | | Property, plant and equipment, net | $230,876 | $503,416 | | Intangible assets, net | $1,364 | $85,860 | | Goodwill | $— | $5,238 | | Total assets | $596,177 | $1,274,857 | | Liabilities | | | | Accounts payable | $53,412 | $44,133 | | Accrued expenses and other current liabilities | $182,391 | $207,022 | | Debt and finance lease liabilities, current | $9,595 | $8,950 | | Total current liabilities | $245,398 | $260,105 | | Long-term debt and finance lease liabilities, net of current portion | $192,700 | $269,279 | | Total liabilities | $488,755 | $555,683 | | Stockholders' equity | | | | Common stock (shares outstanding) | 115,639,591 | 44,336,100 | | Additional paid-in capital | $4,136,586 | $3,790,401 | | Accumulated deficit | $(4,029,298) | $(3,071,069) | | Total stockholders' equity | $107,422 | $719,174 | - Total assets decreased by $678.7 million (53%) from $1,274.9 million in 2023 to $596.2 million in 2024[186] - Cash and cash equivalents decreased by $360.4 million (78%) from $464.7 million in 2023 to $104.3 million in 2024[186] - Total stockholders' equity decreased by $611.8 million (85%) from $719.2 million in 2023 to $107.4 million in 2024[186] Consolidated Statements of Operations Nikola reported a net loss of $(958.2) million in 2024, an increase from $(966.3) million in 2023 (which included discontinued operations). Loss from continuing operations increased to $(958.2) million in 2024 from $(864.6) million in 2023, driven by higher operating expenses, particularly impairment expense Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 2024 | 2023 | | :----------------------------------- | :------- | :------- | | Total revenues | $68,862 | $35,839 | | Gross loss | $(230,426) | $(214,067) | | Total operating expenses | $686,031 | $435,762 | | Loss from operations | $(916,457) | $(649,829) | | Net loss from continuing operations | $(958,229) | $(864,621) | | Loss from discontinued operations | $— | $(101,661) | | Net loss | $(958,229) | $(966,282) | | Basic and diluted net loss per share | $(17.56) | $(36.23) | | Weighted-average shares outstanding | 54,558,229 | 26,667,685 | - Net loss from continuing operations increased by $93.6 million (11%) to $(958.2) million in 2024[188] - Total operating expenses increased by $250.3 million (57%) to $686.0 million in 2024, primarily due to a $336.8 million impairment expense[188] - Basic and diluted net loss per share improved from $(36.23) in 2023 to $(17.56) in 2024, partly due to a 105% increase in weighted-average shares outstanding[188] Consolidated Statements of Comprehensive Loss Nikola reported a comprehensive loss of $(957.9) million in 2024, compared to $(964.9) million in 2023. This includes the net loss adjusted for foreign currency translation adjustments Consolidated Statements of Comprehensive Loss (in thousands) | Metric | 2024 | 2023 | | :----------------------------------- | :------- | :------- | | Net loss | $(958,229) | $(966,282) | | Other comprehensive income (loss): | | | | Foreign currency translation adjustment, net of tax | $284 | $1,415 | | Comprehensive loss | $(957,945) | $(964,867) | Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased significantly from $719.2 million in 2023 to $107.4 million in 2024, primarily due to a net loss of $(958.2) million, partially offset by $187.4 million from common stock issued for convertible notes conversions and $126.9 million from equity distribution agreements - Total stockholders' equity decreased from $719.174 million as of December 31, 2023, to $107.422 million as of December 31, 2024[192] - The accumulated deficit increased by $958.2 million due to the net loss in 2024, reaching $(4,029.3) million[192] - Additional paid-in capital increased by $346.2 million, primarily from common stock issued for convertible notes conversions ($187.4 million) and Equity Distribution Agreements ($126.9 million)[192] - Common stock shares issued and outstanding increased from 44,336,100 in 2023 to 115,639,591 in 2024, reflecting new issuances and the reverse stock split adjustment[186][192] Consolidated Statements of Cash Flows In 2024, Nikola used $(521.5) million in operating activities and $(25.2) million in investing activities, while generating $174.4 million from financing activities. This resulted in a net decrease of $(372.4) million in cash and cash equivalents, ending the year with $121.6 million Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 2024 | 2023 | | :-------------------------------- | :------- | :------- | | Net cash used in operating activities | $(521,504) | $(496,178) | | Net cash used in investing activities | $(25,209) | $(66,749) | | Net cash provided by financing activities | $174,360 | $742,983 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $(372,353) | $180,056 | | Cash and cash equivalents, including restricted cash, end of period | $121,612 | $493,965 | - Net cash used in operating activities was $(521.5) million in 2024, primarily driven by the net loss from continuing operations, partially offset by non-cash adjustments like impairment expense and inventory write-downs[145][195] - Net cash provided by financing activities was $174.4 million in 2024, mainly from proceeds from common stock issuances under Equity Distribution Agreements and convertible debt instruments[149][196] Notes to Consolidated Financial Statements The notes provide detailed information on Nikola's accounting policies, financial statement components, and significant events, including the Chapter 11 bankruptcy filing, which raises substantial doubt about the company's going concern ability 1. BASIS OF PRESENTATION This note outlines Nikola's business as a designer and manufacturer of FCEV and BEV trucks and energy infrastructure. It details the reverse stock split in June 2024 and the Chapter 11 bankruptcy filing in February 2025, which raises substantial doubt about the company's ability to continue as a going concern, leading to a plan of liquidation and cancellation of equity interests - Nikola Corporation is a designer and manufacturer of heavy-duty commercial fuel cell electric vehicles (FCEV) and battery electric vehicles (BEV), and energy infrastructure solutions[198] - A one-for-thirty reverse stock split of common stock became effective on June 24, 2024, and the number of authorized common shares was reduced from 1,600,000,000 to 1,000,000,000[200] - On February 19, 2025, Nikola and certain subsidiaries filed voluntary petitions for relief under Chapter 11, and a plan of liquidation was filed on June 23, 2025, and confirmed on September 5, 2025[207][208][209] - Pursuant to the Plan of Liquidation, all common stock and equity securities will be cancelled by order of the Bankruptcy Court, and holders will not receive any distribution[210] - Management concluded that the Chapter 11 filing raises substantial doubt about the company's ability to continue as a going concern[212] 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details Nikola's significant accounting policies, including principles of consolidation, comprehensive loss, use of estimates, segment information (single operating segment), accounts receivable, concentration of credit, supplier, and customer risks, cash and cash equivalents, fair value of financial instruments (including derivative liabilities), inventory, investments, property, plant and equipment, leases, goodwill, intangible assets, income taxes, stock-based compensation, revenue recognition, product warranties and recall campaigns, and recent accounting pronouncements - The preparation of financial statements requires management to make certain estimates and assumptions, which affect reported amounts and disclosures, and actual results could differ materially[215][217] - Nikola operates as a single operating and reportable segment, with the CEO as the chief operating decision-maker[218] - The company is subject to concentration of supplier risk (limited sources for battery products and fuel cell power modules) and customer risk (dependence on a few dealers for over 10% of total revenue)[221][222][224] - Derivative liabilities were recognized for embedded conversion features in convertible notes due to temporary cash settlement requirements, with changes in fair value recorded in other expense, net[234][235][238] - Goodwill and indefinite-lived intangible assets are tested for impairment annually, and long-lived assets are reviewed when carrying values may not be recoverable, with impairment charges recognized in 2024[256][258][259][260][261][262][266][267] - Product warranty costs and recall campaign costs are estimated and recognized when probable and estimable, based on factors like warranty length, product costs, and failure rates, involving significant management judgment[278][279] 3. BALANCE SHEET COMPONENTS This note provides detailed breakdowns of key balance sheet components. Inventory increased to $71.8 million in 2024, with BEV finished goods reclassified to work-in-process and significant write-downs in 2023 due to recalls. Prepaid expenses and other current assets increased to $51.2 million, including insurance and non-trade receivables. Property, plant and equipment, net, decreased to $230.9 million due to a $254.2 million impairment loss in 2024. Accrued expenses and other current liabilities decreased to $182.4 million, including settlement liabilities and warranty reserves Inventory (in thousands) | Category | December 31, 2024 | December 31, 2023 | | :------------- | :------------------ | :------------------ | | Raw materials | $2,408 | $32,889 | | Work-in-process | $30,146 | $15,486 | | Finished goods | $30,806 | $8,206 | | Service parts | $8,487 | $6,007 | | Total inventory | $71,847 | $62,588 | - During 2023, all BEV truck finished goods inventory was reclassified to work-in-process for retrofitting, and $45.7 million was written down for excess or obsolete BEV battery packs and components due to the voluntary recall[299] Property, Plant and Equipment, Net (in thousands) | Category | December 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------------ | :------------------ | | Buildings | $62,862 | $239,918 | | Tooling | $54,471 | $39,389 | | Construction-in-progress | $66,085 | $135,994 | | Finance lease assets | $12,538 | $37,504 | | Equipment | $88,682 | $67,657 | | Software | $10,202 | $8,649 | | Land | $347 | $7,957 | | Other | $8,032 | $6,409 | | Demo vehicles | $2,955 | $788 | | Leasehold improvements | $4,027 | $3,100 | | Property, plant and equipment, gross | $310,201 | $547,365 | | Less: accumulated depreciation and amortization | $(79,325) | $(43,949) | | Total property, plant and equipment, net | $230,876 | $503,416 | - An impairment loss of $254.2 million was recognized for property, plant and equipment in 2024, based on the difference between carrying value and estimated fair value[306] Accrued Expenses and Other Current Liabilities (in thousands) | Category | December 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------------ | :------------------ | | Settlement liabilities | $115,950 | $91,330 | | Warranty liability, current | $24,939 | $65,703 | | Inventory received not yet invoiced | $10,603 | $8,642 | | Accrued return reserve | $4,425 | $658 | | Accrued purchase of intangible asset | $5,193 | $13,796 | | Accrued payroll and payroll related expenses | $5,020 | $3,254 | | Accrued purchases of property, plant and equipment | $5,009 | $2,458 | | Operating lease liabilities, current | $3,295 | $1,867 | | Other accrued expenses | $6,078 | $6,236 | | Accrued outsourced engineering services | $1,879 | $4,207 | | Derivative liability | $— | $8,871 | | Total | $182,391 | $207,022 | 4. LEASES Nikola leased various assets under noncancellable operating and finance leases expiring through March 2033. Total lease cost was $14.0 million in 2024. In Q4 2024, an impairment test resulted in impairment losses of $40.8 million for finance lease ROU assets and $0.2 million for operating lease ROU assets - Nikola leased land, buildings, mobile fueling, hydrogen infrastructure assets, and equipment under noncancellable operating and finance leases expiring through March 2033[312] - Total lease cost was $14.0 million in 2024, an increase from $8.2 million in 2023[315] Maturities of Lease Liabilities (in thousands) | Years Ended December 31, | Finance leases | Operating leases | Total | | :----------------------- | :------------- | :--------------- | :---- | | 2025 | $10,135 | $4,039 | $14,174 | | 2026 | $19,063 | $3,347 | $22,410 | | 2027 | $8,310 | $1,877 | $10,187 | | 2028 | $7,153 | $1,642 | $8,795 | | 2029 | $4,150 | $1,365 | $5,515 | | Thereafter | $1,327 | $1,712 | $3,039 | | Total lease payments | $50,138 | $13,982 | $64,120 | - Impairment losses of $40.8 million for finance lease right-of-use assets and $0.2 million for operating lease right-of-use assets were recognized in 2024[318] 5. GOODWILL AND INTANGIBLE ASSETS, NET Nikola's total intangible assets, net, decreased from $85.9 million in 2023 to $1.4 million in 2024, and goodwill was fully impaired. This was due to impairment charges of $82.3 million in 2024 for indefinite-lived intangible assets, definite-lived intangible assets, and goodwill, triggered by a sustained decline in stock price and market capitalization Goodwill and Intangible Assets, Net (in thousands) | Category | December 31, 2024 (Net Carrying Amount) | December 31, 2023 (Net Carrying Amount) | | :----------------------------------- | :---------------------------------------- | :---------------------------------------- | | Licenses: | | | | S-WAY Product and Platform license | $441 | $37,500 | | FCPM license | $— | $47,181 | | Other intangibles | $923 | $1,179 | | Total intangible assets | $1,364 | $85,860 | | Goodwill | $— | $5,238 | - Amortization expense for all intangible assets was $7.4 million for both the years ended December 31, 2024, and 2023[320] - In 2024, Nikola recognized impairment charges of $82.3 million for its indefinite-lived intangible asset, definite-lived intangible assets, and goodwill, triggered by sustained declines in stock price and market capitalization[325] 6. INVESTMENTS IN AFFILIATES Nikola's investment in affiliates, primarily Wabash Valley Resources LLC (20% ownership), was $55.4 million in 2024. Equity in net loss of affiliates decreased significantly to $(1.6) million in 2024, mainly due to the divestiture of Nikola Iveco Europe GmbH in 2023, which generated a $70.8 million gain. Nikola - TA HRS 1, LLC was also dissolved in 2023 - Nikola's investment in Wabash Valley Resources LLC (20% equity interest) was $55.4 million as of December 31, 2024[327] - Equity in net loss of affiliates decreased from $(16.4) million in 2023 to $(1.6) million in 2024, primarily due to a reduction of losses from Nikola Iveco Europe GmbH[327][135] - The divestiture of Nikola Iveco Europe GmbH in June 2023 resulted in a gain of $70.8 million[334][335] - The joint venture Nikola - TA HRS 1, LLC was dissolved in November 2023, with Nikola receiving a distribution equal to its investment basis[345] 7. DEBT AND FINANCE LEASE LIABILITIES Total debt and finance lease liabilities (current and non-current) decreased from $278.2 million in 2023 to $202.3 million in 2024. This includes Toggle Convertible Notes, Senior Convertible Notes, 8.25% Convertible Notes, financing obligations, collateralized promissory notes, and insurance premium financing. Significant conversions of convertible notes occurred in both years Debt and Finance Lease Liabilities (in thousands) | Category | December 31, 2024 | December 31, 2023 | | :----------------------------------- | :------------------ | :------------------ | | Current: | | | | Finance lease liabilities | $6,783 | $6,312 | | Insurance premium financing | $1,865 | $1,852 | | Promissory notes | $777 | $699 | | Financing obligations | $170 | $87 | | Debt and finance lease liabilities, current | $9,595 | $8,950 | | Non-current: | | | | Financing obligations | $102,389 | $101,470 | | Toggle Convertible Notes | $52,638 | $124,061 | | Finance lease liabilities | $34,875 | $26,395 | | Promissory notes | $1,572 | $2,306 | | 8.25% Convertible Notes | $1,226 | $15,047 | | Long-term debt and finance lease liabilities, net of current portion | $192,700 | $269,279 | - In 2024, holders of June 2022 Toggle Convertible Notes converted $94.2 million, resulting in an inducement expense of $22.9 million[374] - Third Purchase Agreement Notes (Senior Convertible Notes) had $47.8 million principal converted in 2024, and the agreement was terminated with a $39.4 million payment[405] - The 8.25% Convertible Notes saw $19.8 million principal converted in 2024 and $153.4 million in 2023[418] - Financing obligations for the Phoenix headquarters and Coolidge land totaled $102.4 million as of December 31, 2024[421][425] 8. CAPITAL STRUCTURE Nikola's authorized shares as of December 31, 2024, included 1,000,000,000 common shares and 150,000,000 preferred shares. The company utilized stock purchase agreements (Tumim) and equity distribution agreements (Citi, BTIG) to issue common stock, raising significant net proceeds in 2023 and 2024. Public and direct offerings also contributed to capital - As of December 31, 2024, Nikola had authorized 1,000,000,000 shares of common stock and 150,000,000 shares of preferred stock[440] - The company terminated the First and Second Tumim Purchase Agreements in 2023 after selling shares for net proceeds of $8.4 million and $59.2 million, respectively[444][447] - Under Equity Distribution Agreements, Nikola sold 28.9 million shares for $126.0 million net proceeds in 2024 and 2.3 million shares for $117.5 million net proceeds in 2023[449] - Public offerings in 2023 raised $32.2 million (April) and $95.6 million (December), and a direct offering in April 2023 raised $63.2 million[454][455][456] 9. STOCK-BASED COMPENSATION EXPENSE Nikola's stock-based compensation expense decreased from $75.4 million in 2023 to $32.0 million in 2024. The company granted stock options, restricted stock units (RSUs), and market-based RSUs (TSR awards) under its 2017 and 2020 Stock Plans. Unrecognized compensation expense totaled $27.8 million as of December 31, 2024 Stock-Based Compensation Expense (in thousands) | Category | 2024 | 2023 | | :----------------------------------- | :------- | :------- | | Selling, general, and administrative | $21,360 | $51,003 | | Research and development | $9,343 | $22,213 | | Cost of revenues | $1,266 | $2,175 | | Total stock-based compensation expense | $31,969 | $75,391 | - Nikola granted stock options, restricted stock units (RSUs), and market-based RSU awards (TSR awards) under its 2017 and 2020 Stock Plans[457][460][463][464] - Market-based RSU awards (TSR awards) have a performance condition based on the company's total shareholder return (TSR) relative to a broad group of green energy companies[464] - Total unrecognized compensation expense related to outstanding share-based awards was $27.8 million as of December 31, 2024, with a weighted-average recognition period of 1.37 to 1.65 years[468] 10. DECONSOLIDATION OF SUBSIDIARY Nikola deconsolidated Romeo Power, Inc. on June 30, 2023, by transferring ownership of its assets to an Assignee. This strategic shift resulted in a loss from deconsolidation of $24.9 million in 2023, and Romeo's results are reported as discontinued operations - Nikola deconsolidated Romeo Power, Inc. as of June 30, 2023, by transferring ownership of its assets to SG Service Co., LLC, as Assignee for the Benefit of Creditors of Romeo[469] - The deconsolidation resulted in a loss of $24.9 million from deconsolidation of discontinued operations, recorded in 2023[472] - The operating results of Romeo are reported as discontinued operations for the year ended December 31, 2023[471] Net Loss from Discontinued Operations (in thousands) | Category | 2023 | | :-------------------------- | :------- | | Revenues | $1,665 | | Cost of revenues | $12,926 | | Gross loss | $(11,261) | | Operating expenses: | | | Research and development | $5,673 | | Selling, general and administrative | $14,937 | | Loss on supplier deposits | $44,835 | | Total operating expenses | $65,445 | | Loss from operations | $(76,706) | | Other income (expense), net | | | Interest expense, net | $(53) | | Revaluation of warrant liability | $33 | | Loss from discontinued operations | $(76,726) | 11. RETIREMENT SAVINGS PLAN Nikola sponsors a 401(k) savings plan for eligible employees, providing an employer matching contribution. In 2024 and 2023, the company contributed $4.0 million and $4.1 million, respectively, in matching contributions - Nikola sponsors a 401(k) savings plan available to all eligible employees[475] - The company provides an employer matching contribution of up to 100% for the first 1% of compensation and 50% for each additional 1% contributed between 1% and 6%[475] - Employer matching contributions were $4.0 million in 2024 and $4.1 million in 2023[475] 12. INCOME TAXES Nikola recognized immaterial income tax expense in 2024 ($71 thousand) and 2023 ($12 thousand). The company has significant federal and state net operating loss (NOL) carryforwards and tax credits, but maintains a full valuation allowance against its net deferred tax assets due to a lack of earnings history. A Section 382 study in March 2025 identified an ownership change but no limitation on NOL utilization after December 31, 2047 - Income tax expense was $71 thousand in 2024 and $12 thousand in 2023, primarily related to changes in indefinite-lived goodwill deferred tax liabilities[476] - Nikola maintains a full valuation allowance of $341.0 million in 2024 and $597.7 million in 2023 against its net deferred tax assets due to a lack of earnings history[481] - As of December 31, 2024, the company had federal net operating loss carryforwards of $11.2 million (expiring 2037) and $195.8 million (indefinite), and state NOL carryforwards of $764.1 million (expiring starting 2033)[482] - A Section 382 study in March 2025 identified an ownership change on September 30, 2023, but concluded there is no limitation on the company's ability to utilize its net operating losses after December 31, 2047[483] - Gross unrecognized tax benefits related to research and experimental tax credits were $21.9 million in 2024 and $22.8 million in 2023[485] 13. COMMITMENTS AND CONTINGENCIES Nikola is involved in various legal and regulatory actions, including an SEC settlement ($80.2 million remaining liability in 2024), shareholder securities litigation, and derivative litigation. The company was awarded $165.0 million plus interest in arbitration against Mr. Milton. It also has purchase commitments ($115.5 million in 2024) and a $7.2 million maximum exposure under an inventory repurchase agreement. The BEV recall campaign, with $57.4 million accrued, was completed in June 2025 - Nikola has a remaining liability of $80.2 million as of December 31, 2024, for the $125.0 million SEC civil penalty, with a resolution agreement reached to classify $43.1 million as an Allowed General Unsecured Claim with a $4.0 million cash payment on the Effective Date[491] - An arbitration panel awarded Nikola approximately $165.0 million plus interest against Mr. Milton, which the company is pursuing for c