Nikola Corp. offered an update Monday on its recent voluntary recall of more than 200 of its electric vehicles after an investigation into their battery packs.
“We may incur significant expenses as a result of these events and there can be no assurance as to when we will be able to resume production of our BEV trucks,” the company said in a regulatory filing. “As a result, our brand, business, results of operations, financial condition and cash flows may be adversely affected.”
Nikola
NKLA,
said earlier in August it would recall about 209 Class 8 Tre battery-electric vehicles (BEV) “as a precautionary measure,” after an issue with a single component of its battery packs.
It said it would also pause new BEV sales “temporarily,” though the company’s move doesn’t impact the production of its hydrogen fuel-cell electric vehicles (FCEV), which have a different design.
Nikola said that Exponent, a third-party investigator, deemed a coolant leak inside a battery pack to be the likely cause of a June 2023 truck fire at its Phoenix headquarters.
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“We believe these findings were further corroborated by a minor thermal incident that impacted one pack on an engineering validation truck parked at our Coolidge, Arizona plant on August 10, 2023,” the company said Monday.
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Internal investigations from Nikola’s safety and engineering teams indicated a single supplier component within the battery pack as the likely source of the coolant leak, the company said.
The company filed the voluntary recall with the National Highway Traffic Safety Administration on Aug. 15, and has a temporary hold on sales of new BEV trucks.
“If costs related to these events are higher than we expect or we are unable to sell our existing inventory or resume production of our BEV trucks on a timely basis, our business, results of operations (including our ability to meet our previously stated expectations regarding deliveries for the remainder of 2023) and financial condition may be adversely impacted,” the filing said.
Separately, Nikola said it’s planning to issue $325 million in senior convertible bonds in a registered direct offering. The company expects to close an initial sale of $125 million in principal on Monday. The company expects net cash proceeds from the initial closing of about $124.5 million.
The stock was down 22% and has lost 29% in the year to date, while the S&P 500
SPX,
has gained 13.8%.
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