Nikola Corporation Files for Chapter 11 Bankruptcy Protection, Shares Plummet

Once a rising star in the electric and hydrogen truck industry, Nikola faces financial collapse

Hydrogen truck manufacturer Nikola Corporation has officially filed for Chapter 11 bankruptcy protection, signaling the end of a tumultuous journey that once saw the company valued at over $30 billion. Bloomberg reported on February 18 (local time) that the struggling automaker submitted its bankruptcy petition to a Delaware court.

Following the news, Nikola’s stock price nosedived 47.12% in pre-market trading, reaching $0.40 per share. This sharp decline comes after a staggering 41.44% surge in the previous regular trading session, highlighting the extreme volatility driven by speculative traders. Given the bankruptcy filing, trading of Nikola’s shares is expected to be halted soon.

From Market Leader to Bankruptcy: The Rise and Fall of Nikola Corporation

In its bankruptcy petition, Nikola disclosed that it currently holds approximately $1 billion in assets but faces an overwhelming debt burden of around $10 billion. The company's financial struggles had been making headlines in recent months, with multiple reports predicting imminent bankruptcy protection filing.

Headquartered in Phoenix, Arizona, Nikola was once considered a major disruptor in the electric and hydrogen vehicle sector. At its peak, the company’s market capitalization exceeded $30 billion, briefly surpassing automotive giant Ford. In 2020, Nikola successfully went public via a special purpose acquisition company (SPAC) merger, capitalizing on the surging demand for electric vehicle stocks.

However, Nikola’s journey was riddled with controversies from the outset. The company’s founder, Trevor Milton, was convicted of fraud for exaggerating the capabilities of Nikola’s hydrogen fuel cell technology. His fraudulent claims misled investors, ultimately leading to a four-year prison sentence. The scandal severely damaged Nikola’s reputation and investor confidence, setting the stage for its financial downfall.

The Impact of Short Sellers and Market Turbulence

Nikola’s stock price took a dramatic downturn after Wall Street short-selling firm Hindenburg Research accused the company of misleading investors about its technology and capabilities. The report, published in 2020, triggered a wave of skepticism and lawsuits, leading to a sharp decline in Nikola’s valuation.

The broader electric vehicle market has also been facing significant challenges, with rising competition and diminishing investor enthusiasm. Several EV startups have struggled to sustain operations amid increasing production costs and supply chain disruptions. Nikola’s bankruptcy follows a trend of electric vehicle companies collapsing under financial pressure. In June 2024, Fisker Inc. filed for Chapter 11 bankruptcy protection, and in January 2025, Canoo Inc. followed suit. The recent downturn in the EV market has made it increasingly difficult for newer players to survive.

What’s Next for Nikola and the Electric Truck Industry?

With Nikola’s bankruptcy protection filing, the fate of the company remains uncertain. Industry analysts speculate that the company could either restructure its operations under court supervision or seek potential buyers for its remaining assets. Given the increasing challenges in the hydrogen and electric truck market, Nikola’s future appears bleak.

The collapse of once-promising EV startups like Nikola underscores the volatile nature of the electric vehicle industry. While established automakers continue to invest in sustainable transportation, the road for new entrants remains perilous, with many struggling to turn ambitious promises into profitable businesses.