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Nikola electric truck recall price tag $61.8M

Electric truck maker reports negative revenue and no truck sales in Q3

Nikola reserved $61.8 million to cover the cost of recalling 209 battery-electric trucks. (Photo courtesy of ABC15/Phoenix)

Nikola Corp. has set aside $61.8 million to replace the batteries in its recalled electric trucks. The company expects to begin returning repaired trucks to customers in the first quarter.

The accrued liability in third-quarter earnings includes the estimated cost to reengineer, validate and retrofit the 209 recalled battery-electric trucks with an alternative battery pack. Nikola did not identify the supplier.

“Upon further investigation, it was determined that the compromise of the battery packs was not limited to only the coolant manifold,” Nikola said in a news release. “As a result, our team has decided to replace the Romeo packs on existing customer battery-electric trucks with an alternative solution.”

Unlike most safety recalls where the supplier of the defective component contributes to the recall cost, Nikola owned Romeo Power. Therefore, it bears the recall costs alone. 

Recall cash spend should be less than accrual

Nikola expects to spend less than the accrual. Selling off the remaining battery-electric trucks in inventory should bring in $13 million. Nikola expects another $10.7 million coming from accounts receivable. That means spending $38.1 million over the next nine to 12 months. The company has said it will assemble battery-electric trucks as orders are received.

Nikola in June liquidated Romeo. Its assets were sold to Mullen Automotive. Nikola reported a $101 million loss from discontinued operations during the quarter.


Despite the recall, Nikola said it received an order for 47 battery-electric trucks from one dealer in Q3.

Nikola shipped three trucks, bought back seven and built no new units during the quarter. It reported negative revenue of $1.7 million. The startup lost $425.8 million, or 50 cents a share. That compared to a loss of $236.2 million, or 54 cents, a year ago. However, following the recent doubling of authorized shares, Nikola had 857.2 million outstanding shares compared to 438.4 million a year ago.

The company improved its cash and equivalents to $362.8 million, mostly through the sales of new equity. The money is sufficient to cover the recall expense and run the business into 2024, CFO Stacy Pasterick said on a call with analysts.

Nikola focusing on selling fuel cell trucks in California

Nikola began producing fuel cell electric vehicles (FCEVs) on Sept. 28. It has 277 nonbinding orders from 35 customers.

“We think the competition is well behind us and believe there is white space for us to capture market share with the introduction of the Advanced Clean Fleets Rule,” CEO Steve Girsky said.

The company is mining business based on California voucher programs that cut up to $288,000 from the price of a fuel cell truck for a large fleet and up to $408,000 for a small fleet of 20 or fewer trucks.

“We are driving forward, capitalizing on our first-mover advantage with our hydrogen fuel cell electric truck and laying the foundation for the ‘hydrogen highway’ starting in California,” Girsky said.

Nikola has mobile fueling and availability of hydrogen fuel to last into the first quarter of 2024. It has slowed plans for mobile fuelers to conserve costs and because early customers are using less fuel than expected. Startup infrastructure developer Voltera is Nikola’s partner in planning eight hydrogen fueling stations at sites it is developing in California.

Nikola sees tailwinds from the adoption of zero-emissions vehicles, specifically in California, where all new drayage trucks registered with the California Air Resources Board beginning Jan. 1, 2024, must emit zero tailpipe emissions. 

So far, so good

Nikola said its Tre FCEV Class 8 truck accounts for 96% of the California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentives Project (HVIP) for fuel cell trucks through last Friday. Its battery-electric trucks are listed in 50% of Class 8 vouchers issued.

More than 30,000 trucks operating in California ports will eventually need to be replaced.

“We believe this represents a significant opportunity for Nikola in the near term and are well on our way to capturing market share,” the company said.

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Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.