General Motors and Nikola: Why the new electric alliance could be dangerous for Tesla

General Motors knows how to build cars profitably. Nikola brings the innovation that is still missing. Together, both could stir up the market.

Nikola Motor Company’s Badger is a upcoming fully-electric and hydrogen fuel cell electric pickup truck, with 600 miles driving range (300 hydrogen, 300 battery)

The electric car pioneer Tesla is facing serious competition for its planned Cybertruck. The traditional US automaker General Motors (GM) has teamed up with the electric car and fuel cell start-up Nikola, to build pick-up trucks, the most profitable automotive segment in the US.

The alliance is worth it for both of them: Nikola, who has hardly made any sales so far, will receive urgently needed know-how and factories as part of the alliance to get the planned electric pick-up called “Badger” quickly on the road. The alliance also provides the necessary credibility that the newcomer from Arizona has lacked so far.

GM, in turn, receives a stake in the up-and-coming Phoenix start-up valued at $2 billion without having to put down any cash or shares. Another two billion should flow if GM produces the pick-ups in its factories, supplies batteries and later also fuel cells.

But above all, General Motors is getting attention and a certain coolness factor that the 100-year-old car company lacks. Nikola is not GM’s first electric offensive. GM recognized earlier than any of the other US auto companies that the future lies in electric and perhaps even autonomous vehicles.

Nikola Badger interior

Company boss Mary Barra is serious when she says that she wants to turn GM into a fully electrified automaker. Just last week, Barra expanded its electric car alliance with the Japanese manufacturer Honda.

But that doesn’t really go down with customers: E-cars – in the eyes of many, only hip start-ups can do that. Therefore, Barra would do well to seek alliance with a hip company like Nikola. This alliance of tradition and start-up can endanger Tesla boss Elon Musk and his Cybertruck.

The extremely angular and futuristic-looking pick-up truck is due to hit the market next year. So far, the Cybertruck has had a bumpy start – especially with its slightly unsuccessful performance in which Elon Musk accidentally smashed an allegedly unbreakable window. But there are enough Americans just waiting for a cool electric pickup.

Nikola had so far mainly focused on trucks. In Europe, the company cooperates with Iveco. The first battery trucks (Nikola Tre) should roll off the assembly line in Ulm from the first quarter of 2021.

GM has already teased an electrically powered Hummer, but it will play in the very upscale price segment. With the Badger from GM and Nikola, Tesla has to prepare for well-financed and, thanks to Nikola, also cool competition.

Author: Nabeel K

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