Last week's sparring between Nikola Corp. and short-seller Hindenburg Research could be dismissed as entertaining theater, if it didn't come on the heels of General Motors agreeing to engineer and build Nikola Badger pickups powered by fuel cells and by plug-in batteries. Indeed, the provocatively titled analysis "Nikola: How to Parlay an Ocean of Lies Into a Partnership With the Largest Auto OEM in America" was a topic of hot chatter among Wall Street types and readers on autonews.com message boards.
While there's room to scrutinize a company that briefly surpassed Ford Motor Co. in market value despite not yet producing a single roadworthy vehicle, the idea that GM got duped looks grossly overplayed.
CEO Mary Barra assured investors last week that GM did "appropriate diligence" before partnering with Nikola. Just remember: What's appropriate for GM isn't necessarily the same as for retail investors.
If the purpose of a strategic partnership between companies is to complement each other's strengths and compensate for weaknesses, there is plenty of logic to this one.
Nikola gets access to GM's expertise in engineering and manufacturing, saving it billions in battery, powertrain, engineering and validation expense — not to mention trial-and-error costs for a company whose chief engineer lists no experience with fuel cells, batteries or autos.
In exchange, GM gains scale for its massive clean-powertrain investments, a bunch of shares that investors seem crazy about and yet another brand to take to market.
Will consumers buy EVs from Cadillac and Chevrolet? Some will. Others may prefer the style and image of a Honda or a Nikola — so GM is working on those, too.
America's largest automaker has seen the good and the bad of badge engineering. But with more variety of cooks in the kitchen, it can offer a broader menu that should satisfy a wider array of customers.
GM has also seen the good and bad of joint ventures, such as its costly breakup with Fiat.
Though this deal on the surface may seem to do more for the startup Nikola — sending its shares skyrocketing — don't worry about GM. It found another way to flex its battery investment, and it knows how to make money on trucks.