Troubled electric vehicle manufacturer Nikola has officially sought Chapter 11 bankruptcy protection. Once hailed as a promising player in the electric vehicle market, the company has faced significant challenges and controversy, especially after its founder was found guilty in 2022 of deceiving investors regarding the firm’s actual capabilities.
Based in Arizona, Nikola submitted its bankruptcy filing in the United States Bankruptcy Court for the District of Delaware. In its announcement, the company revealed plans to pursue an auction and potential sale of its business assets.
Currently, Nikola holds around $47 million in cash reserves. The company intends to maintain limited service and support for existing vehicles, including fueling operations, until the end of March, pending court approval. However, it will need to secure additional funding to continue these essential activities afterward.
CEO Steve Girsky noted that similar to many firms in the electric vehicle sector, Nikola is grappling with various market challenges and economic pressures that have affected its operations. He mentioned that the company has attempted to raise capital and cut expenses, but those efforts fell short.
The Board of Directors believes that filing for Chapter 11 is the most viable option for the company and its stakeholders at this moment. Following the announcement, Nikola’s stock fell more than 47% before the market opened on Wednesday.
