Nikola files for Chapter 11 bankruptcy, ending the electric truck fraud story that started with a truck rolled downhill

Summary

Nikola Corporation filed for Chapter 11 bankruptcy on February 20, 2025, ending an 11-year run marked by founder fraud, regulatory settlements, and a stock chart that tracked like a meme coin from peak to worthlessness.

The company's arc was swift. In June 2020, Nikola went public via SPAC and immediately soared to a $20 billion market valuation—five times the typical SPAC valuation and briefly greater than Ford's market cap. Within months, the collapse began. General Motors took an 11% stake and was hailed as a sophisticated investor; the company later had to dramatically scale back that position after Hindenburg Research exposed a series of deceptive marketing claims.

The central fraud centered on a December 2016 promotional video. Nikola claimed the Nikola One prototype was operational and "in motion," but federal prosecutors later revealed it was towed to the top of a Utah hill, its brakes released to let it roll downhill. The door was taped shut to prevent it from falling off, and the batteries were removed to prevent a fire. This was presented as evidence of a working truck.

Founder Trevor Milton orchestrated the deception. He was indicted on multiple fraud charges in July 2021, found guilty in October 2022, and sentenced to prison. Nikola settled with the SEC for $125 million over misleading investors. Milton is scheduled to be released in 2027.

The bankruptcy filing came after years of production delays, mounting debt, and an irreparably tarnished reputation. Even as the company filed, $27 million in volume traded on public markets that day—suggesting retail investors were still buying the stock, likely unaware of the company's state or attracted by the narrative of a once-hyped EV truck maker.

The broader context matters: Nikola benefited from genuine tailwinds. Other traditional automakers lacked strong EV strategies at the time, the Biden administration and EPA were pushing electric truck adoption through subsidies and mandates (including a $40,000 tax credit for EV truck buyers and requirements that 25% of long-haul tractor sales be electric by February 2032), and the market was primed for a Tesla-like disruptor in commercial trucking. But execution mattered. Milton was, by one read, exceptionally skilled at raising money from non-financial investors—the Department of Energy, CNH Industrial, General Motors, and the California Transportation Commission all backed the company—while the venture capital world appears to have been skeptical from the start.

The fraud was an open secret in some circles. One source notes that Tesla was never actually losing engineers to Nikola, and once Milton entered boardrooms, the pitch collapsed under scrutiny. What worked was appealing to government bodies and industrial players unfamiliar with deep technical due diligence.

Other EV truck makers have also faltered: Lordstown Motors filed for bankruptcy in 2023, Fisker failed in June 2024, and British bus startup Arrival sold its assets. The pattern suggests the challenge is not the market opportunity—which remains real—but execution and capital efficiency in a capital-intensive business.