Tesla Rival Nikola buys energy storage company Romeo Power for $144M to secure control of its supply chain

Electric heavy truck maker Nikola Motors announced on Monday it has agreed to buy energy storage technology company Romeo Power for $144 million as part of its effort to secure control of critical battery pack engineering and production process, giving the Tesla rival control over a key part of its supply chain.

As part of the acquisition agreement, Nikola will provide Romeo with $35 million in interim funding to continue its operations until the transaction closes. Nikola also said it believes the acquisition could save the company up to $350 million over the next four years.

The Cypress, California-based Romeo is an energy storage technology company that specializes in building battery modules and packs for large electric commercial vehicles, using lithium-ion battery cells manufactured by other companies. The company is focused on designing and manufacturing lithium-ion battery modules and packs for commercial vehicle applications.

As Romeo’s largest customer, Nikola expects the acquisition will allow for significant operational improvement and cost reduction in battery pack production. The addition of Romeo’s battery and battery management system (BMS) engineering capabilities is also expected to support accelerated product development and improved performance for Nikola customers.

In a statement, Nikola CEO Mark Russell said, “Romeo has been a valued supplier to Nikola, and we are excited to further leverage their technological capabilities as the landscape for vehicle electrification grows more sophisticated. With control over the essential battery pack technologies and manufacturing process, we believe we will be able to accelerate the development of our electrification platform and better serve our customers.”

Russell also added: “Given our strong relationship with Romeo and ongoing collaboration, we are confident in our ability to successfully integrate and deliver the many expected strategic and financial benefits of this acquisition. We look forward to creating a zero-emissions future together.”

Robert Mancini, Romeo Power’s Chairman of the Board of Directors, added, “As Romeo’s largest customer, Nikola has been a cornerstone of our development and growth, and this is a natural evolution of our relationship. Our products provide critical energy density important to heavy-duty vehicles, combined with safety performance and battery management software. Following an extensive review of alternatives, we firmly believe that this combination offers the best opportunity for Romeo shareholders to participate in the ongoing value creation at a larger scale, stronger combined company. It is exciting to see Romeo joining the Nikola family.”

We’ve been following Nikola for quite some time. , a one-time Tesla competitor and the maker of zero-emission, hydrogen-powered electric trucks. In July 2021, Nikola founder Trevor Milton was charged with three counts of criminal fraud—for “lying about ‘nearly all aspects of the business”—and two counts of securities fraud. However, the company was not charged.

Founded in 2014 by Trevor Milton, the Salt Lake City-based Nikola is a one-time Tesla competitor and the maker of zero-emission, hydrogen-powered electric trucks. The company builds heavy-duty transport trucks using hybrid hydrogen-electric powertrains.

Named after inventor Nikola Tesla, the company designs and manufactures electric vehicles, vehicle components, energy storage systems, and electric vehicle drivetrains. The company went public in June 2020 via a special purpose acquisition company (SPAC).