Automaker Nikola (NASDAQ:NKLA) has been in the news over the past weeks due to a number of reasons and this week, it is back in focus. On Wednesday, automobile giant General Motors’s (NYSE:GM) President reiterated its intention of going ahead with a partnership and that resulted in a 13% rally in the Nikola stock. It is a significant development for Nikola considering the recent troubles for the company.
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Mark Reuss, who is the President of General Motors, gave interviews to Bloomberg TV and CNBC. In the interviews, Reuss stated that although it is true that the $2 billion partnership deal has not been finalized yet, Nikola and General Motors are going ahead with their talks.
The two companies had announced an agreement back in September. However, the deal was canceled after an alarming research report from a short-selling firm.
The deal was supposed to have been completed towards the end of September, however, General Motors decided to hold on. That being said, the President of the company revealed that completing the deal is going to be in the best interests of both parties.
The Potential Deal
Reuss went on to state that the partnership is expected to lead to considerable efficiencies and cost advantages. Nikola and General Motors are now trying to complete the deal at any point before December 3.
As per the provisions of the partnership, Nikola is going to deploy the fuel cell technology and batteries developed by General Motors, while General Motors is going to get the rights to manufacture the Badger pickup truck from Nikola.
The rally in the Nikola stock must have come as a relief for certain investors considering the fact that it had plummeted by as much as 15% last Friday. The decline on Friday was possibly due to Nikola CEO’s comments that the company was prepared to work in a solitary role if the partnership was canceled.
While it is true that the stock made a strong recovery, it is also necessary to note that the Nikola stock is still far away from the June highs of $80 a share.
Hence, it remains to be seen whether the stock can add to its gains in the coming days. It goes without saying that the developments on Wednesday were a major positive for Nikola and investors would do well to keep an eye on the stock in the coming weeks.
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