Justice Department launches probe into Nikola

The Department of Justice has launched an investigation into electric car maker Nikola on allegations for misleading investors.

The Wall Street Journal’s Ben Foldy reported:

The Justice Department has joined U.S. securities regulators in examining allegations that electric-truck startup Nikola Corp. NKLA -8.27% misled investors by making exaggerated claims about its technology, according to people familiar with the matter.

The Justice Department’s inquiry is being handled by the Manhattan U.S. attorney’s office, working in concert with the Securities and Exchange Commission, which has initiated its own examination of the claims about Nikola, the people said.

Breana Noble from the Detroit News wrote:

The claims that Nikola CEO Trevor Milton overstated the company’s capabilities on numerous occasions has led the Phoenix-based startup that went public in June to lose the 40% stock gains earned after announcing a 10-year alliance with GM.

The accusations do not involve GM, but the Detroit automaker will take an 11% stake in the company and is providing Nikola its electric batteries, its hydrogen fuel-cells and manufacturing capacity. GM CEO Mary Barra on Monday told investors the company had done the “appropriate diligence.”

The Financial Times’ Claire Bushey, Peter Campbell, and Kadhim Shubber reported:

The involvement of DoJ investigators is the latest twist in a saga that has sent Nikola’s shares down 40 per cent since last Thursday, only two days after the company signed a $2bn deal with General Motors that had sent them to a record high.

The truckmaker’s shares rose steadily since listing in the summer through a combination with a special purpose acquisition company, a move that allowed it to sidestep a traditional initial public offering.