In a surprising turn of events, Nikola, the alternative-fuel truck manufacturer, has revealed its plans to liquidate the assets of battery manufacturer Romeo Power. This decision comes just 11 months after Nikola acquired Romeo Power for $144 million in stock, aiming to bolster its own battery pack production capabilities.
Back when the deal was struck, Romeo Power was one of Nikola’s trusted battery suppliers, alongside LG Energy Solution and Proterra. The acquisition was expected to pave the way for Nikola to manufacture its own battery packs by 2024.
However, in an unexpected twist, Nikola has chosen to discontinue its operations with Romeo Power and initiate proceedings under the California Assignment for the Benefit of Creditors (ABC) statutory scheme. Nikola’s spokesperson commented on the decision, stating, “Nikola is discontinuing its operations with Romeo Power and has commenced a proceeding under the California Assignment for the Benefit of Creditors (ABC) statutory scheme.”
The exact reasons behind this decision remain unclear, but industry experts speculate that the substantial costs associated with developing and producing battery packs in-house may have influenced Nikola’s change of heart. It is possible that the company has opted to seek battery sourcing alternatives instead.
This announcement comes on the heels of Nikola’s recent workforce reduction efforts, wherein the company announced a cut of 270 jobs across its European and U.S. facilities. The goal of this move is to achieve an annual reduction of more than $50 million in personnel-related expenses, leaving Nikola with a total of 900 employees.
Furthermore, as part of its strategic realignment, Nikola intends to focus more extensively on the North American market in the immediate future. To facilitate this shift, the company plans to sell its joint venture share to Iveco Group. Additionally, Nikola aims to streamline its truck manufacturing costs by optimizing its supply chain through better localization and reducing material expenses.
The liquidation of Romeo Power assets marks a significant departure from Nikola’s previous plans to manufacture its own battery packs. While the company’s motivations for this sudden shift remain shrouded in mystery, Nikola appears determined to recalibrate its operations and allocate resources more effectively as it navigates the evolving landscape of the alternative-fuel truck industry.