Nikola has been one of the most trendy players in the electric vehicle industry in the last few years. The electric truck manufacturer agreed on Tuesday to a settlement with the Securities and Exchange Commission that will require it to pay $125 million in response to charges that it lied to and misled investors.
The SEC issued a statement regarding the settlement saying that Nikola’s founder Trevor Milton misled investors about the company’s tech developments, production capabilities, and financial condition. The statement also said that Milton had begun a campaign to inflate its stock price before it had produced even a single commercial product or had any revenues.
As Nikola’s CEO in 2018, Milton produced a video purporting to demonstrate the company’s Nikola One Electric Semi Truck in action. He described the truck as “fully functional” and “incredible.”
Nikola’s rapid climb in value was crowned in September 2020 when General Motors took on a $2 billion stake in the startup. Things crashed down for the company that same month when a Hindenburg Research report was published revealing deceptive marketing. The report showed that the company’s product video was made by letting a truck roll down a hill and taping from an angle that created the impression that the road was level.
A week after the report was published, Nikola admitted that the truck depicted did not “drive on its propulsion.” Milton resigned from the company later that month.
By February of this year, the company admitted that Milton had made multiple claims about the company’s products that were “inaccurate.”
The settlement announced this week does not require Nikola to admit or deny doing anything in violation of federal law. Milton has been individually charged with fraud.
Nikola went public in the summer of last year, with its stock price topping $65 per share, based on the now-revealed misleading marketing claims. On Thursday morning, the company’s stock was trading at just over $11 per share.