Nikola (NKLA) - Get Nikola Corporation Report shares dropped Wednesday after the electric-truck maker said that its agreement to make 2,500 to 5,000 refuse tracks for Republic Services (RSG) - Get Republic Services, Inc. Report has ended.
Nikola recently traded at $15.53, down 7.7%. The shares had risen 68% year to date through Tuesday amid investor enthusiasm for electric-vehicle stocks.
Still, Nikola shares have given up 81% since June 9 amid allegations, which Nikola denies, of false claims about its planned vehicles.
“The goal of the collaboration was to design and build an industry-first fully integrated refuse truck based on a zero-emissions battery-electric drive platform and body while also integrating multiple new systems into a new state-of-the-art vehicle,” Nikola said in a statement.
“After considerable collaboration and review, both companies determined that the combination of the various new technologies and design concepts would result in longer than expected development time, and unexpected costs.
"As a result, the program is being terminated resulting in the cancellation of the previously announced vehicle order.”
As for Nikola’s reaction, “This was the right decision for both companies given the resources and investments required,” said Nikola Chief Executive Mark Russell.
“We support and respect Republic Services’ commitment to achieving environmentally responsible, sustainable solutions for their customers.”
When the agreement with Republic was announced in August, Russell sang a slightly different tune. “This is a game changer,” he said.
Nikola plans to begin deliveries of Tre battery-electric semi-trucks in the U.S. in 2021.
Wednesday’s news didn’t sit well with Wedbush analyst Daniel Ives, who has an underperform rating and a $15 price target.
“In a nutshell, this is a gut punch for investors that were hoping this monster order was a potential paradigm changer for Nikola and reference customer going forward,” he said.
“The company is making some progress on its core initiatives and now at least the slimmed down GM partnership is done.
"[However,] the company still has a Kilimanjaro-like uphill climb to gain back [Wall] Street credibility heading into 2021 with today's news viewed as another step backwards."