General Motors announced its second major electric vehicle partnership in less than a week on Tuesday, this time a $2 billion deal with startup Nikola.
GM will take an 11% ownership stake in the Phoenix company and will engineer and build Nikola’s Badger hydrogen fuel cell and electric pickup truck. The Badger is expected to be in production by the end of 2022.
GM also will help with cost reductions for Nikola's other vehicles including heavy trucks, and the company will use GM's battery system and hydrogen fuel technology.
In exchange for the 10-year deal, GM will get $2 billion worth of Nikola's newly issued common stock that will come in three increments through 2025.
News of the deal sent shares of both companies surging despite a broader-market downturn. Nikola's shares jumped $14.50, or 40.8%, to close Tuesday at $50.05. GM advanced $2.38, or 7.9%, to end at $32.38.
The move sets up GM for a new revenue stream and possibly a change in its business model, essentially becoming a parts supplier to other companies for electric vehicle frames, batteries, controls and components.
GM has been under pressure from Wall Street to more quickly monetize its electric vehicle technology, and industry analysts have suggested spinning off its EV unit as a separate company.
Barra said on a conference call that GM has a “platform that others can use that's going to give us scale and help us drive efficiency.” She said the electric vehicle platform and batteries are attractive to other companies, which is a huge opportunity for GM.