Nikola shares his upswing after GM executives hope to maintain the partnership settlement alive
Shares in competitive electric vehicle startup Nikola rose nearly 12% during premarket trading on Wednesday after a General Motors executive said the automaker still sees a great opportunity in working with the company.
GM President Mark Reuss said the automaker is "continuing to work on the opportunity" of its $ 2 billion deal with Nikola, which was announced last month but has not yet been finalized.
"The ability to fit our fuel cells into a Class 7 and 8 vehicle is spectacular," he said during CNBC's Squawk Box. "We know that there are great operational cost benefits, great efficiencies and great opportunities there."
The comments were some of the first from a GM executive on the deal after the two sides postponed the expected close of the deal last month.
GM's shares rose more than 2% during premarket trading. After the markets opened, Nikola’s shares rose about 6% while GM’s shares rose about 1%.
The September 8 deal was originally viewed as a no-loss situation for GM. The partnership would give the Detroit automaker an 11% stake in the company for the supply of Nikola battery and fuel cell technologies and for the manufacture of Nikolas Badger pickups.
It was expected to close before September 30th, but the talks broke out over fraud allegations against the company and its founder Trevor Milton, who stepped down as the company's CEO on September 21st. Since then, two women have also pleaded sexual assault with Utah authorities against Milton. The controversy has cut the company's shares in half.
The deal can be terminated by either side if it is not completed by December 3rd. This is evident from a public filing by Nikola when the partnership was announced.