Shares of Nikola Corp. (NASDAQ:NKLA) took a dip during early trading sessions subsequent to the electric big rig manufacturer’s cautionary note about potential challenges in meeting its annual delivery goals. The warning stems from the aftermath of recent battery-related issues that the company has been grappling with. In a regulatory filing released on Monday, the corporation also acknowledged the likelihood of incurring substantial costs for rectifying or locating a replacement for the problematic component.
Both a fire incident that occurred in June and a subsequent occurrence in August triggered Nikola’s decision to recall 209 battery-electric trucks earlier this month. This action was accompanied by a temporary suspension of new sales to address the situation. The regulatory filing also highlighted the potential negative impact on the company’s brand, business operations, financial standing, and cash flow due to these events. There is particular concern regarding the company’s ability to meet its previously stated delivery projections for the remainder of 2023.
Initially aiming to deliver up to 350 electric big rigs within the year, Nikola later indicated a potential production figure of 500 units. However, these ambitions have been challenged by recent setbacks.
The market reaction was evident as Nikola’s shares experienced an 11% decline, settling at $1.74 as of 9:33 a.m. in New York. This downturn adds to the company’s year-long decline of approximately 20% in stock value.
This disclosure marks another hurdle in an already tumultuous period for the corporation. Earlier this month, the company’s CEO resigned abruptly, contributing to the overall sense of instability. In an effort to manage costs and conserve capital, Nikola has also announced a series of job cuts over the past few months. The corporation has additionally faced public scrutiny and criticism from its ousted founder.
The battery-related incidents from June and August, initially mired in speculation including the possibility of sabotage, were later attributed to a coolant leak by Nikola. This conclusion was validated by a minor secondary incident in August, leading to the subsequent recall. Fortunately, no injuries were reported in connection to these events.
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Author Faith Yakubu 
