Following the deal, Romeo’s shares closed up about 27% on Monday; Nikola closed up nearly 8%.
Under the deal, Nikola will provide Romeo Power with an interim fund of $35 million to continue operations until the transaction closes, the company said.
With the acquisition deal, Nikola is expected to save up to $350 million over the next four years.
Nikola is known as one of Romeo Power’s biggest customers. CEO Nikola Mark Russell said the acquisition deal would see the company accelerate development of its electrification platform.
“Given our strong relationship with Romeo and ongoing collaboration, we are confident in our ability to successfully integrate and deliver the many expected strategic and financial benefits of this acquisition,” said CEO Nikola Mark Russell.
Earlier in June, the company said it was evaluating options to make its own battery packs by 2024 to increase production volumes and reduce costs.
The cost of battery materials has indeed increased in recent months. Conditions were exacerbated by Russia’s invasion of Ukraine which forced electric vehicle manufacturers to raise prices