Nikola – Desperate times.

Nikola inadvertently signals that it is in real trouble.

• The correct way to silence one’s critics is to rebut their arguments with evidence not to have them silenced using spurious methods which strongly hints that Nikola has no proper arguments and that its critics are broadly correct on their key allegations.
• I have largely stayed away from commenting on Nikola as hydrogen fuel cells is a technology I don’t know very much about and I have not followed the company very closely.
• However, it would appear that Nikola has inadvertently shown its hand by having some of its critics’ videos removed from YouTube for alleged copyright infringement.
• It has also cancelled “Nikola World” event in December citing the pandemic which I think represented a great opportunity for Nikola to set the record straight.
• The pandemic has been around for 9 months now and people have been cancelling events for more than 6 and so I think the real reason for its cancellation is that the veil of its credibility has been pierced.
• Nikola is a “Tesla me too” except that it makes lorries and pick-up trucks and that it uses hydrogen cell as a power source rather than lithium batteries.
• The fact that it too is named after the famous and controversial electrical engineer Nikola Tesla is evidence enough of its aspirations.
• Although it has followed Elon Musk up the hype curve, it has yet to deliver anything, unlike Tesla.
• This is where it has come unstuck as Nikola’s critics have dug up evidence (see here) that all is not as it seems including a misleading video where the Nikola truck is actually rolling downhill rather than moving under its own power.
• Nikola’s rebuttal of its critics to date has not been very strong.
• To the claim that it did not use its own inverters (a key piece of hydrogen fuel technology), the response was “we never said that we did”.
• To the claim that the truck rolled downhill, the company had no answer other than to say that it had not designed it to run under its own power.
• To the claim that a former partner referred to Nikola’s hydrogen fuel cell technology as “hot air,” the response was that his views were not relevant.
• While I think that the Hindenburg report goes too far on some of its assertions, the crucial allegations have not been adequately rebutted with its strongest rebuttal being “Nikola has been vetted by some of the world’s most credible companies and investors”.
• This is known as an argument to authority meaning that because someone who should know says that it is good, therefore it is.
• There are plenty of “authorities” who have been dead wrong on a number of occasions like Walmart and a host of ex-business leaders and politicians on Theranos and Hewlett Packard on Autonomy.
• Hence, I don’t think that this argument carries any weight at all, and I think that GM is going to regret not doing its due diligence properly.
• Nikola’s latest move to silence its critics by having YouTube take down their videos for copywrite infringement sounds like a desperate move to halt the growing tide of bad press to me.
• This is particularly the case because there are plenty of other videos still on YouTube that are not critical of Nikola but use its footage under the “fair use” exception.
• I think that real situation lies somewhere between what Nikola says and what short-seller Hindenburg says both of whom are massively incentivised by the share price albeit in opposite directions.
• I think that Nikola is a classic Silicon Valley “fake it till you make it” strategy and unfortunately the wheels have come off before Nikola could get the technology to work.
• I do not think that the company set out to deceive or mislead anyone but difficulties in getting the technology right meant that it could not live up to the hype that it used to raise money.
• This has painted the company into a very difficult corner from which it may not emerge.
• I have no idea whether or not the company would ever have gotten its technology to work properly or been able to launch a commercial product, but I am certain that this was its intent all along.
• The probability now is that we will never find out as the company is out of time and does not have a real product.
• I expect the rats will quickly desert what is almost certainly a sinking ship.