Nikola files for bankruptcy a year after founder’s prison sentence: Once-hyped electric truck maker crashes amid cash burn

Nikola Corporation, once a promising name in electric trucking, has filed for Chapter 11 bankruptcy protection in Delaware. The Phoenix-based company, known for its battery-electric and hydrogen-powered trucks, made the filing on Wednesday, marking another collapse in the struggling EV sector.

The move comes just two years after the company’s founder, Trevor Milton, was sentenced to four years in prison for defrauding investors. Milton’s conviction stemmed from exaggerated claims about Nikola’s technology—promises that never materialized.

As part of the bankruptcy process, Nikola is putting its assets up for auction while keeping a skeleton crew in place to maintain limited operations. Employees will continue to be paid during the transition. Investors, however, took a major hit—Nikola’s stock tumbled 51.1% in premarket trading, erasing the previous day’s 41.4% surge.

“Nikola Corp. became the latest EV maker to go bankrupt on Wednesday, as the Phoenix-based battery-electric and fuel-cell-electric truck and van maker voluntarily filed for Chapter 11. The company said it has also filed to pursue an auction and sale process, and to ensure its “limited operations” can continue, including paying its employees, during the sale process,” MarketWatch reported.

CEO Steve Girsky attributed the downfall to economic pressures and market challenges, stating that efforts to secure funding and reduce liabilities were not enough to keep the company afloat. Nikola currently has about $47 million in cash to sustain operations during the sale process. It plans to provide limited service and hydrogen fueling support for existing vehicles until March 2025.

The company’s troubles didn’t start with bankruptcy. Milton’s fraud conviction in 2022 cast a long shadow over Nikola’s future, damaging its reputation and investor confidence. During his sentencing, Milton made an unusual plea, citing personal hardships such as his Cherokee heritage, his wife’s Lyme disease, his mother’s battle with breast cancer, and his ties to the LDS faith—none of which swayed the court.

Nikola was founded in Salt Lake City with the goal of revolutionizing heavy-duty trucking through hydrogen-electric technology. But despite seven years in business and a high-profile public listing via SPAC in 2020, the company never sold a single vehicle.

Named after inventor Nikola Tesla, the company once aimed to reshape the future of transportation. Now, it’s another cautionary tale in the EV industry, where bold claims and high expectations often clash with harsh financial realities.