Nikola's dismal demand — it delivered a fraction of the trucks it made — slams stock price

Nikola Corp said issues hitting demand are not expected to ease in the near future after it delivered fewer than a sixth of the battery-powered trucks it made in the fourth quarter, sending its shares down as much as 9% on Thursday.

The Phoenix, Arizona based EV startup, which has ambitions to bring to market the first hydrogen-powered heavy-duty trucks later this year, saw its cash reserves dwindle in the quarter and also forecast 2023 gross margins deep in the red.

Nikola executives painted a dire picture on call with investors, noting the slower-than-expected uptake of battery-electric semi-trucks due to issues including a lack of a charging network.

“We don’t believe these challenges will be abated anytime soon,” Kim Brady, Nikola’s finance chief said.

For the fourth quarter, it missed revenue targets by a wide margin and reported swelling losses.

Nikola, like other smaller EV firms, is faced with high production costs and supply bottlenecks in a time when demand has stalled amid rising inflation.

Tesla, which for years struggled to ramp production to a mass level and went through a self-acknowledged “production hell,” has increased its market share with recently announced price cuts.

Brady told investors Nikola would be better off delivering fewer Tre BEVs to preserve cash and minimize losses. That model has a maximum range of up to 330 miles.

Tesla, which delivered its first semi truck to PepsiCo PEP.O in December, is yet to announce mileage range but a PepsiCo official told Reuters their Semis will have a 500-mile range.

Nikola said in the fourth quarter it produced 133 trucks and delivered just 20 of those to dealerships. It expects to deliver between 250 and 350 Tre BEVs this year, compared with 131 deliveries in 2022.

Nikola shares, which hit a record high of $94 in June 2020 days after it went public, were trading at $2.15 on Thursday. Stocks of other EV makers including Lucid Group Inc LCID.O were also down sharply.

Lucid on Wednesday forecast 2023 production well short of Street expectations and reported a major drop in orders during the December quarter.

Another EV truck maker Lordstown Motors Corp RIDE.O also said on Thursday it would temporarily stop production and deliveries of its pickup truck because of performance and quality issues with some components, sending its shares tumbling 11%.

It expects a negative gross margin of 75% to 95% for 2023. At its investor day presentation early last year, the company had forecast a positive gross margin for the Tre BEV.

At the end of December, Nikola had cash and cash equivalents of $233.4 million, down from $497.2 mln a year earlier.

December quarter revenue of $6.6 million missed analysts’ estimates of $32.1 million from Refinitiv, and net loss widened to $222.1 million from $158.9 million a year earlier.