Nikola halts production and cuts costs after quarterly loss

(Reuters) – Nikola Corp reported a larger quarterly loss on Tuesday and said it would pause production to streamline an assembly line at its College, Arizona, plant amid slowing demand for its battery-powered trucks.

The company said it would double down on cost-cutting and would make battery-only electric vans on demand, sending its shares down 13%.

Investors focused on cash reserves at Nikola and other electric car makers amid concerns that slowing sales could prompt companies to pursue more stock sales to raise cash.

Nikola said cash burn in the first quarter was $240 million, compared to $200 million per quarter in 2022.

“This level of cash burn is not sustainable for our business, and we are looking at every option to cut spending,” Stacy Pastrick, the company’s chief financial officer, told analysts on a conference call. She added that the company is also seeking to raise capital.

“I personally lead the renewed focus on rigorous management of all three pillars of working capital: cost reduction, specifically payments, inventory purchases and management, and of course cash collection,” she said.

The Coolidge line will resume production in July and will accommodate both hydrogen fuel cell and battery electric trucks on the same line, Nikola said, adding that the focus will be on building the former.

Nikola’s net loss widened to $169.09 million in the quarter, from $152.94 million a year earlier.

Nikola said it would sell its 50% stake in a joint venture with Italian truck maker Iveco Group (IVG.MI) in Europe to focus on the North American market.

Nikola added that he was evaluating a possible restructuring of the Romeo Power battery unit that could include selling assets or filing for bankruptcy.

It bought Nicola Romeo, a battery supplier, in a $144 million deal last year in an effort to boost its supply chain.

Nikola shares fell 12.8 percent to 86 cents Tuesday afternoon on the Nasdaq.

Additional reporting by Tanya Jain and Tyachi Datta in Bengaluru; Edited by Sriraj Kalluvila

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