Does Nikola have the capability to deliver on its promises?

We don't know yet who's right and who's not in the dispute between Nikola Corp., an EV startup in fundraising mode, and Hindenburg Research, a company that derives its profits from short selling stocks.

We won't delve into the mechanics of short selling, but let's just say that Hindenburg is in a position to rake in huge profits if Nikola's stock tanks.

To make that happen, Hindenburg published an extremely critical report last week about Nikola's business practices, the claims the company and its executive chairman, Trevor Milton, have made and its history of dealing with other companies and investors. There's a lot to unpack in that report, titled "Nikola: How to Parlay an Ocean of Lies Into a Partnership With the Largest Auto OEM in America." (Milton issued a rebuttal to the report on YouTube, which can be viewed here.)

Unless you've been on a desert island this year as a way to escape COVID-19, then you know Wall Street is currently mesmerized by EV startups. Not wanting to miss out on the next Tesla — which has seen the value of its shares more than quadruple this year — investment funds, established automakers, suppliers and mom and pop investors have been throwing money at EV startups.

Ford pumped $500 million into Rivian in 2019, and General Motors last week announced it was taking an 11 percent stake in Nikola.

You have to think that companies such as GM and suppliers such as Bosch, as well as potential customers who have placed orders for electric trucks with Nikola, have done their due diligence and have made sure Nikola has the technology, people, research, facilities and capability to deliver the products it has promised, namely a fuel cell-powered semitruck and the Badger, a midsize pickup that will be powered by either batteries or a fuel cell.

A startup is going to need significant brainpower and massive industrial resources to deliver on those promises.

If mass-producing a hydrogen-powered semitruck that is reliable, durable, safe and at least reasonably affordable was an easy job, industry titans such as International, Kenworth, Freightliner, Peterbilt, Volvo and others would already be doing it.

Part of my job at Automotive News is to report on startups, and that perfectly meshes with my job on the engineering beat. I tend to view everything through a lens that focuses sharply on technology and manufacturing.

Let's take a look at some of the issues surrounding Nikola and some points in the GM deal that caused me to furrow my eyebrows.

The GM-Nikola announcement says no cash will pass from GM to Nikola. Instead, GM will make its fuel cell and battery technology available to Nikola, provide in-kind services and build under contract the company's lone consumer model, the Badger, by 2022. No money out of GM's pocket, right? Not hardly.

Red flags abound here. GM, tied up with its own aggressive $20 billion EV and autonomous vehicle program, has plenty on its plate to keep its own engineers busy. Even though the deal calls for Nikola to pay GM as much as $700 million for production costs, GM will have to devote its resources and factory space to Nikola at a time when it is launching an array of incredibly complex vehicles.

A contract manufacturer, such as Magna Steyr, takes a completely engineered, tested and validated vehicle and builds it to the specifications of its customer, the automaker. Magna assembles the Jaguar I-Pace electric crossover, for example, at its plant in Graz, Austria. Contract manufacturers do not carry out product development work, validate components or test systems. In contract manufacturing, if a component doesn't fit or work properly, it's on the automaker to fix it.

Does Nikola have the capability to design, test and deliver to GM a pickup that is ready to be mass-produced in less than two years? Nothing in Nikola's past suggests it does. The company has never delivered anything more than test-mule trucks and currently has nothing in production.

It takes years for automakers to create vehicles from the ground up. Ford has been working on the Bronco for at least the last five years. Rivian announced its R1T electric pickup in the spring of 2018, but design and development work started long before that. R1T deliveries don't begin until next spring — and that's if everything goes right.

One more thing: GM plans to sell Nikola its proprietary fuel cell technology and new high-performance Ultium batteries. On the surface, that looks like a smart deal. GM will drive its own costs down as its volume goes up. But that could also be a real minefield. If Nikola engineers don't get the installation, thermal management systems and charging protocols correct, it could sully GM's reputation.

The Hindenburg report claims in dozens of examples that Nikola has been making misleading claims about its technology to lure investors. One point in the report centered on a 2017 video Nikola produced showing what appeared to be a battery-electric semitruck driving on a desert road under its own power.

Hindenburg charged that Nikola staged the video and that the truck was filmed coasting down an incline, not under its own power. In a rebuttal to the Hindenburg report, Nikola did not deny the allegation the truck was not moving under its own power.

Nikola said the truck's drivetrain components were "bench tested," while other parts of the truck, such as the batteries and suspension, were functional.

Bench testing is far removed from how a component has to function in everyday use. In my view, this would be like an airplane manufacturer showing a new jet taxiing down a runway, taking orders and then, when the money was deposited, saying: "We never said the jet would fly."

I always want to know who the brains are behind an engineering operation. It's a massive technical feat to create semitrucks and pickups that get their electricity from batteries and fuel cells.

This is akin to rocket science. Fuel cells operate under extreme high pressure. Battery packs have all sorts of special needs and must be kept at the proper temperature to avoid fires or internal damage that can shorten driving range. Nikola's chief engineer, Kevin Lynk, does not have a background in fuel cells or batteries, or anything automotive, according to his corporate bio and his LinkedIn profile.

This is not to say Lynk isn't capable of overseeing the engineering of Nikola's products, but it is highly unusual for an EV startup to hand that role to someone with no auto industry experience.

For example, Rivian is stocked with a deep bench of engineers who have worked for global automakers. Its director of advanced products, Andy Jones, is a veteran of sports car manufacturer McLaren and several other automotive ventures. Bollinger Motors, the Detroit electric truck startup, hired Ford veteran Jerry Lavine, who most recently was chief technology officer for Bordrin, a Chinese EV startup that ran out of money.

Nikola is working with several outside engineering firms that appear to be doing much of the heavy lifting in terms of design and product development. And it all just might work. Few people thought Tesla would succeed.

Bottom line: After reading the Hindenburg report — knowing full well the motivation behind it — and then reading Nikola's rebuttal to some of the charges, investors, both individual and corporate, could be in for a very bumpy ride.