The Cheater in the Race to go Green
Introduction : The Cheater in the Race to go Green
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| Image Credit: Wikimedia Commons |
The world is working hard to combat the human effect on the environment. Within the car market, many manufactures (Tesla, Chevrolet, BMW, and etc.) have created electric vehicles to contribute to this issue. Nikola Corporation's creative solution is to introduce hydrogen-electric vehicle, mainly tractor trucks, and to create a network of hydrogen-electric refueling station for their products. Seen as an upcoming competitor to Tesla, Nikola had potential to take the world by storm. Unfortunately, the opposite had happened.
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| The Badger showcasing the partnership of Nikola Cooperation and General Motors. Image Credit: Nikola Corporation |
On September 8th of 2020, Trevor Milton (the Founder of Nikola Corporation) had secured a remarkable deal with General Motors, an automotive company that was behind in the race to go electric. GM would engineer the battery and fuel cell for the new Nikola pickup truck, the Badger. In exchange, GM would receive $2 billion equity stock in Nikola (Source : Teslarati). This deal further legitimize Nikola as true competitor against Tesla and GM could see a future in electric vehicle. Truly a win-win for both side ... for now.
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| The Nikola One being revealed to the public for the first time. This reveal had lead to the initial success of the company, gaining many investors. Image Credit: Nikola Corporation |
Just two day after the news of the deal, a report had been released and light had shed on the dark side of Nikola and Trevor Milton. The Hindenburg Research released a lengthy exposé providing extensive evidence to the claim that the the company was based on the numerous lies told by Milton leading to investors to invest $20 billion into a company with no real future. The exposé gives the public multiple instances where the company had lied to garner support from the public. One example is the YouTube video which unveiled the Nikola One, the hydrogen electric powered tractor truck, in action. It is true that the truck is in motion but by gravity rather than the truck itself. Previous employees of the company have revealed in the Hindenburg Research exposé that the truck was pull on top of a hill so that it rolled down to give the illusion that it was the new technology at work. Another example is at the exposition where the Nikola One was revealed to the public. Though the lights turned on and the art convinces the audience that it is a hydrogen electric vehicle, a small yet important detail shows the truth behind the glamour. The truck could not power itself because it was never completed. A cable connected the the truck to a generator to turn on the light. An artist had created a design on the truck to illustrate the lie that the vehicle was hydrogen electric when if fact it was not. The Hindenburg Research exposé, with the help of previous employees, exposes much more behind the words of the Trevor Milton and Nikola Corporation. The win that Nikola had with General Motors took a harsh downfall as the public learned of the truth behind the company. People were shocked but the investors felt worse. $20 billion was invested by investors hopeful that this company had a shot to beat Tesla in the Green Race but they were fools in a clown's game. They were mislead and lied to for their monetary contributions. However, their loss was seen by a higher force who would not accept this type of behavior.
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| Trevor Milton leaving the Thurgood Marshall United States Courthouse in New York on Monday, Sept. 12, 2022. Image Credit: Freight Waves |
The Securities and Exchange Commission charges Milton for "repeatedly disseminating false and misleading information – typically by speaking directly to investors through social media – about Nikola’s products and technological accomplishments" on July of 2021 (Source : SEC). The company seemed to cooperate with the SEC which allowed Nikola Corporation to settle its charges with a payout of $125 million and continuous cooperation with the SEC in the future just 6 months after (Source : SEC). While dealing with the SEC, the company (mainly Trevor Milton) was dealing with a case with the U.S Justice Department which had reached a conclusion during the SEC case. On October 21st of 2021, Trevor Milton was convicted of securities fraud and wire fraud by the U.S Justice Department (Source : Forbes). The company had "falsely claimed to have built its own revolutionary truck that was actually a General Motors Corp. product with Nikola's logo stamped onto it” (Source : NPR). Trevor had lost all of his credibility that such an allegation would be true no matter what the man had said or provided. Hit after hit, Nikola Corporation had its named tarnished in the matter of moments after its height. The deception that had been conducted by the founder and the company had lost the trust of the investors and consumers of the nation. Money truly does help a company progress but at what point does it become unethical? Ask Nikola Corporation, they know the answer.
The post provides a good explanation of the ethical issues surrounding Nikola and their failure to deliver a genuine product to the public. It's quite unfortunate to see that the truck that the public was hoping to be a new, revolutionary technology that would contribute to the saving of our planet, is in fact just a rebrand of an existing product. It makes me wonder, though, what was Trevor Milton's intentions with the façade? Did he hope to eventually have his own product that followed through with the promises he made? Or, was he really banking on lying to the public forever and essentially scam everyone?
ReplyDeleteTrevor Milton had several previous businesses where he deceived people by lying about the progress of the technology that company had. These businesses were quite small and he was able to hide much of his past prior to Nikola Corporation. Those who have bought those previous businesses or worked there, understand what type of man Milton is. He is a liar that would say anything to gain public attention and capital. I truly believe that there was a part of Milton that wanted to see this come to life. The world is facing a lot of problems which is depleting its life and the resource it supplied us to continue our way of life. Milton's ideas are possible but not in the way he had described them.
DeleteIt's clear that Nikola Corporation and its founder Trevor Milton engaged in deceptive practices, misrepresenting their technology and accomplishments to investors and the public. The blog adopts a neutral and informative tone, presenting the facts and letting the reader draw their own conclusions. One question I have is whether there were any warning signs or red flags that investors and regulators could have picked up on earlier to prevent this situation from escalating. Additionally, what impact do you think this case will have on the wider industry and the push towards more sustainable transportation options?
ReplyDeleteTrevor Milton had started up several businesses in the past where he did lie about the progress of the technology the company had to potential buyers. However, much of this wasn't covered publicly which allowed Milton to sweep his past under the rug. Milton provided photos and videos of the the technology at Nikola Corporation which alleviate any worries that investors had about the company. Since hydrogen-electric energy was a relatively new aspect of sustainable transportation, many didn't question the proof and data supplied by Milton as they weren't experts themselves. In terms of the everlasting effects on the sustainable transportation industry, I believe that they took a hit. Companies wanting to enter this industry will have to work harder to legitimize their place to the consumers. The data and proof they give the public would have to be verified from a third party source to show that they progress they are making is true. The hole dug by Nikola is a hole that is suffered by anyone in the sustainable transportation industry.
DeleteThis CEO truly embodies "Let me copy your homework but I'll change the words". Obviously this company was founded to rival Tesla. I think they really tried to take "fake it til you make it" to a whole new level. They failed to consider that they can't fake a technological revolution.
ReplyDeleteTrevor Milton made repeated comments about being a competitor of Elon Musk. "There's very few people that can out Elon in the world and I am one of them" (Source : https://www.youtube.com/watch?v=o10QeNUuLhQ). He fueled himself to be better than Musk but failed to present a legitimate idea. The hydrogen-electric energy was a great idea for the future yet the way he followed through with it was awful. This create a tougher entrance into the market for companies who want to genuinely change the world. They'll have to work harder to make a legitimate name.
DeleteThe expose lead to a significant decline in the company's stock price and reputation and Milton faced charges of securities fraud and wire fraud by the US Justice Department. A true liar, liar, pants on fire scenario. The rise and fall of Nikola is a prime example of what may happen if you build a company on false claims and hype. Companies should be transparent and hold integrity.
ReplyDeleteI completely agree with you. Companies should be transparent with their stakeholder to provide honest reports of their progress. Nikola did provide updates of their supposed success but they are later revealed to be flat out lies. Take the example of the truck video. It showed the truck in motion to show people that the technology is a reality when in actuality the truck was simply pushed down a hill. When a company lacks honesty with the people that matters, it breaks their trust. Trust is a huge part of the success of any company. If you don't have a sense of trust with stakeholders, stakeholders will not trust the company and will not purchase from them. Though Nikola was getting initial investments from investors, it will have little to no sales due to their lack of honesty.
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