7 ms·

It was such a good deal for GM that it didn't matter. They got 11% of Nikola, which they can start selling off after a year. And that was just to allow Nikola a

by mafuyu 6y ago

It was such a good deal for GM that it didn't matter. They got 11% of Nikola, which they can start selling off after a year. And that was just to allow Nikola access to their IP, which GM wanted to develop and test anyways. I imagine they got such great terms because Nikola has absolutely nothing working in-house.

toomuchtodo 6y ago
11% of 0 is 0. This simply solidifies the idea that GM is led by out of touch legacy management. "We were supposed to check they only rolled the truck down a hill?" Say what you will about Musk and Tesla (I know, I know), but their Class 8 Semi did a nationwide tour (under its own power) to potential customers [1] and also occasionally pitches in to perform vehicle deliveries [2], no downhill coasting required. [1] https://electrek.co/2018/08/25/tesla-semi-drove-across-country-supercharger-elon-musk/ https://electrek.co/2018/08/25/tesla-semi-drove-across-count... [2] https://electrek.co/2020/06/26/tesla-semi-spotted-used-deliver-vehicles-end-of-quarter-push/ https://electrek.co/2020/06/26/tesla-semi-spotted-used-deliv...
- xeromal 6y ago
  Not really. They can probably sell it at a loss and recover it all back in tax breaks.
  - deleted 6y ago
    [deleted]
- 112012123 6y ago
  In addition to the 11%, GM is also slated to earn up to 700 million dollars in cash.
  - yholio 6y ago
    More specifically was slated to earn 700 million, if the Nikola ponzi had been able to slip under the radar and continue. I'm absolutely sure NKLA does not have 0.7 billion lying around in cash, those are new investment that they need to raise. Fake it till you make it, they say. In the current situation, all investors will require substantial proof of working technology. No working tech, no new investment, the company will probably fold before paying back a cent to GM.
    - easde 6y ago
      As of their last earnings report Nikola had almost exactly $700M in cash / cash equivalents. Maybe GM just wants that :)
      - yholio 6y ago
        That's interesting. Without any product, what exactly are those sources of cash earnings?
        toomuchtodo 6y ago
        Reverse merger with a SPAC investment vehicle. They're not earnings, they're investor funds. https://www.businessinsider.com/spac-biggest-blank-check-deals-ackman-chamath-palihapitiya-nikola-draftkings-2020-7 https://www.businessinsider.com/spac-biggest-blank-check-dea...
      - nickik 6y ago
        They need that for the next 3 years where they will not make money.
- coolspot 6y ago
  They probably can sell calls against those shares, basically getting risk-free money regardless of NKLA price in future.
  - mrep 6y ago
    Doubt it because if it got exercised they would be selling their stock. Otherwise, they just be able to sell daily calls at 1 cent below the price for no premium and watch it exercise and thus liquidating the stock they are supposed to hold onto.
- pfisch 6y ago
  If GM didn't know they rolled it down a hill then it sounds like people are going to jail.
nordsieck 6y ago
> It was such a good deal for GM that it didn't matter. Exactly. There is literally no downside for GM. If it's a total scam and falls apart tomorrow, well - they didn't pay any money for the deal (aside from lawyer time). Oh well. If they can sell off their stock grant, that's free money. If they can actually make parts/vehicles for Nikola, that's even more money.
- nickik 6y ago
  Every engineer that works on working with Nikola is not working on trying to catch up in EV. When it was just Tesla it was fine for them to be bad at making EV. Now that VW and others are starting to get serious, they really need to make something happen.
- samfisher83 6y ago
  Until they get sued. Many of the people who made money of Madoff had to return the money they gained.
  - hatsunearu 6y ago
    You're saying an investor (GM) can be held liable for what the limited liability corporation (Nikolai) did?
    - hobby-coder-guy 6y ago
      In some cases, yes.
      - nordsieck 6y ago
        >> You're saying an investor (GM) can be held liable for what the limited liability corporation (Nikolai) did? > In some cases, yes. Now I'm curious. Can you give an example? This[1] is a pretty good overview to piercing the corporate veil. I suppose it's technically possible for a company to be liable for what a company they invest in does, but there would have to be some pretty weird circumstances (for example, if the two companies had substantially co-mingled finances and leadership). I don't see any of it applying to the GM/Nikola deal. ___ 1. https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html https://www.nolo.com/legal-encyclopedia/personal-liability-p...
freewilly1040 6y ago
They've rented out their reputation to further this scam. That reputation is now damaged.
- nradov 6y ago
  Perhaps, but it's hard to imagine a typical GM customer giving a damn about this investment.
samizdis 6y ago
Great call. See: https://news.ycombinator.com/item?id=24483980 https://news.ycombinator.com/item?id=24483980

by mafuyu 6y ago

toomuchtodo 6y ago

11% of 0 is 0. This simply solidifies the idea that GM is led by out of touch legacy management. "We were supposed to check they only rolled the truck down a hill?" Say what you will about Musk and Tesla (I know, I know), but their Class 8 Semi did a nationwide tour (under its own power) to potential customers [1] and also occasionally pitches in to perform vehicle deliveries [2], no downhill coasting required. [1] https://electrek.co/2018/08/25/tesla-semi-drove-across-country-supercharger-elon-musk/ https://electrek.co/2018/08/25/tesla-semi-drove-across-count... [2] https://electrek.co/2020/06/26/tesla-semi-spotted-used-deliver-vehicles-end-of-quarter-push/ https://electrek.co/2020/06/26/tesla-semi-spotted-used-deliv...

xeromal 6y ago
Not really. They can probably sell it at a loss and recover it all back in tax breaks.
- deleted 6y ago
  [deleted]
112012123 6y ago
In addition to the 11%, GM is also slated to earn up to 700 million dollars in cash.
- yholio 6y ago
  More specifically was slated to earn 700 million, if the Nikola ponzi had been able to slip under the radar and continue. I'm absolutely sure NKLA does not have 0.7 billion lying around in cash, those are new investment that they need to raise. Fake it till you make it, they say. In the current situation, all investors will require substantial proof of working technology. No working tech, no new investment, the company will probably fold before paying back a cent to GM.
  - easde 6y ago
    As of their last earnings report Nikola had almost exactly $700M in cash / cash equivalents. Maybe GM just wants that :)
    - yholio 6y ago
      That's interesting. Without any product, what exactly are those sources of cash earnings?
      - toomuchtodo 6y ago
        Reverse merger with a SPAC investment vehicle. They're not earnings, they're investor funds. https://www.businessinsider.com/spac-biggest-blank-check-deals-ackman-chamath-palihapitiya-nikola-draftkings-2020-7 https://www.businessinsider.com/spac-biggest-blank-check-dea...
    - nickik 6y ago
      They need that for the next 3 years where they will not make money.
coolspot 6y ago
They probably can sell calls against those shares, basically getting risk-free money regardless of NKLA price in future.
- mrep 6y ago
  Doubt it because if it got exercised they would be selling their stock. Otherwise, they just be able to sell daily calls at 1 cent below the price for no premium and watch it exercise and thus liquidating the stock they are supposed to hold onto.
pfisch 6y ago
If GM didn't know they rolled it down a hill then it sounds like people are going to jail.

nordsieck 6y ago

> It was such a good deal for GM that it didn't matter. Exactly. There is literally no downside for GM. If it's a total scam and falls apart tomorrow, well - they didn't pay any money for the deal (aside from lawyer time). Oh well. If they can sell off their stock grant, that's free money. If they can actually make parts/vehicles for Nikola, that's even more money.

nickik 6y ago
Every engineer that works on working with Nikola is not working on trying to catch up in EV. When it was just Tesla it was fine for them to be bad at making EV. Now that VW and others are starting to get serious, they really need to make something happen.
samfisher83 6y ago
Until they get sued. Many of the people who made money of Madoff had to return the money they gained.
- hatsunearu 6y ago
  You're saying an investor (GM) can be held liable for what the limited liability corporation (Nikolai) did?
  - hobby-coder-guy 6y ago
    In some cases, yes.
    - nordsieck 6y ago
      >> You're saying an investor (GM) can be held liable for what the limited liability corporation (Nikolai) did? > In some cases, yes. Now I'm curious. Can you give an example? This[1] is a pretty good overview to piercing the corporate veil. I suppose it's technically possible for a company to be liable for what a company they invest in does, but there would have to be some pretty weird circumstances (for example, if the two companies had substantially co-mingled finances and leadership). I don't see any of it applying to the GM/Nikola deal. ___ 1. https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html https://www.nolo.com/legal-encyclopedia/personal-liability-p...

freewilly1040 6y ago

They've rented out their reputation to further this scam. That reputation is now damaged.

nradov 6y ago
Perhaps, but it's hard to imagine a typical GM customer giving a damn about this investment.

samizdis 6y ago

Great call. See: https://news.ycombinator.com/item?id=24483980 https://news.ycombinator.com/item?id=24483980