Nikola Corporation ( NKLA) is a pre-revenue company that banks on trucks that work with the help of efficiently powered electrical batteries and hydrogen fuel cells. The giant company took a mega step yesterday towards initiating joint commercial operations. This strategic partnership with General Motors (GM) is going to bring some extremely fruitful consequences for both the gigantic corporations.
Prior information about Nikola’s Strategy
Nikola Corporation is an American automobile firm that has announced numerous concepts of zero-emission vehicles. The company is based in Phoenix, Arizona, where the development and research facility is located.
On the other hand, General Motors is an American multinational corporation. The firm is basically located in Detroit that has the ability to manufacture, design, market, and distribute vehicles as well as vehicle parts. The corporation also sells financial services regarding vehicles.
Nikola Strategy a great partnership
The Nikola Corporation filed a Form – 8K, with the US Securities and Exchange Commission (SEC) yesterday. The company made a mega entry into a strategic partnership and also shared a subscription agreement with other epic corporations namely General Motors. Pursuant to this agreement, the company agreed for the issuing and selling of 47,698,545 shares of its common stock to GM Holdings valued at an enormous price of 2.0 billion dollars.
The huge investment is based on a volume-weighted average price per share of the Company’s common stock. Regarding the strategic partnership with GM, Nikola stated in Form 8-K. It was stated that concurrently with the subscription agreement, the company has entered into a Master Electric Truck Development Agreement ( METDA). This will help in constituting the design and also enhances the development of certain electric and fuel cell-powered trucks. These vehicles are going to get an identification under individual program plans, each of which will have a default term of six years altogether.
Regarding the closure, the respected company and GM holdings have also agreed to make an official entry into a Stockholder Agreement. In accordance with the terms and conditions, GM holdings will be entitled to make a nomination of a board designee for elections that will begin in the year 2021. Also, this agreement is expected to attain its closure by the 30th of September, 2020. However, if both the companies fail to find closure for this agreement by the 3rd of December, 2020, then the termination of the agreement can be done by either of the two companies.