Nikola (NASDAQ:NKLA) stock fell nearly 15% over the weekend after it recalled most of its Tre electric battery trucks.
The company found a risk of fire and recalled 209 Class B Battery Electric Vehicles (BEVs). Nikola is now emphasizing its hydrogen-powered truck line, called HYLA.
NKLA stock opened this morning at $1.59 per share, a market capitalization of about $1 billion. Shares are down 73% over the last year.
Lithium Battery Burn
An investigation by Exponent, a third party brought in by Nikola, found a coolant leak inside a battery pack. This leak is likely what caused the truck fire at the company’s Phoenix headquarters in June. This was corroborated by a smaller incident at its Coolidge Arizona plant on Aug. 10.
The recall includes 60% of the trucks Nikola has made over the last year and nearly all those shipped to customers. The company has also halted sales of the Tre.
Nikola was founded in 2014, and its first truck ran on natural gas. It went public in 2020 and projected deliveries of 300-500 of its battery trucks. At one time, Nikola’s market cap exceeded that of Ford Motor (NYSE:F).
Lithium-ion batteries are known to be a fire hazard and must be handled carefully, both in production and during charging. Regulators estimate there have been 25,000 incidents of fire or overheating with lithium-ion batteries over the last five years. While there is also fire danger from hydrogen tanks, hydrogen can be quickly vented as a fire starts.
The result is that Nikola is now getting government aid for its hydrogen fuel cells, even while its stock plummets over the battery problems.
NKLA Stock: What Happens Next?
I wrote on Aug. 4 that the company’s future was in doubt after the sudden resignation of CEO Michael Lohscheller and a switch to hydrogen. All I can do is repeat the warning.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
