How Nikola Corporation Could Be Impacted by the Trump Presidency

Nikola Corporation (NASDAQ: NKLA), a company that makes hydrogen fuel cell and battery-powered trucks, is at a critical point. The Phoenix-based company has faced challenges in recent years, but things could become even harder if Donald Trump wins the presidency in 2024. Trump’s policies might create a tough environment for green energy businesses like Nikola, raising concerns about its survival.

Under President Joe Biden, Nikola and other clean energy companies have received strong support. Policies like the Inflation Reduction Act (IRA) and the EPA Clean Ports Program have provided incentives for businesses to switch to cleaner energy options. These policies encouraged demand for electric and hydrogen trucks, which Nikola produces.

However, Donald Trump has promised to end these policies if he returns to the White House. Trump has also criticized the “EV mandate,” which discourages the use of gas-powered cars. If these policies are removed, the demand for Nikola’s trucks could drop significantly. Without strong government support, many customers might choose cheaper, gas-powered options instead.

Nikola’s financial struggles are another big concern. While the company has managed to reduce some of its costs, it is still losing money. To keep the business running, Nikola has been raising funds by selling more shares and bonds. This approach has diluted the value of its stock, frustrating investors.

At its peak, Nikola was valued at over $30 billion. Today, the company’s market value is only about $97 million. Investors have grown more cautious, and without government incentives to support green energy, it could become harder for Nikola to raise the money it needs.

Nikola does have some positives. It is currently the only company in North America offering hydrogen-powered Class 8 trucks. These trucks have long driving ranges and short refueling times, which makes them attractive to some buyers. Nikola expects to deliver 300-350 hydrogen trucks in 2024.

However, producing and delivering these trucks requires a lot of money. Nikola’s biggest challenge is balancing its need to grow quickly while avoiding running out of cash. This is difficult because Nikola doesn’t have the financial strength of competitors like Tesla, which can afford to sacrifice short-term profits to increase sales.

For Nikola to survive, it may need a strong partner. Many struggling green energy companies have turned to large automakers for help. For example, Volkswagen has partnered with startups like Rivian and Xpeng Motors to boost their businesses.

Nikola could benefit from a similar partnership. However, its past still haunts the company. After fraud allegations involving its former founder, Trevor Milton, General Motors decided not to invest in Nikola. Although Nikola has moved on from that scandal, it may still struggle to find a willing partner.

Nikola faces a difficult road ahead. If Trump ends green energy policies, demand for the company’s trucks could fall, and raising money would become harder. While it has potential, its financial challenges and weak balance sheet remain serious concerns. Without strong government support or a strategic partner, Nikola could struggle to survive in the coming years.

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