Nikola founder Milton charged with misleading investors

Trevor Milton stands next to a red semi-truck at an unveiling event.
Nikola founder and CEO Trevor Milton unveiling a prototype of the Nikola Two fuel cell big rig hauler. Prosecutors have charged Milton with misleading investors about the company’s products and business.

Nikola Corp. founder and former chairman Trevor Milton has been charged by prosecutors with making false statements to investors in the electric-vehicle startup. The company’s shares fell the most in almost five months.

Milton, who stepped down from the company last year, is in federal custody after voluntarily surrendering. He’s charged with misleading investors from November 2019 until around September 2020 about the development of Nikola’s products and technology, according to an indictment unsealed Thursday by federal prosecutors in N.Y.

“Milton sold a version of Nikola not as it was — an early-stage company with a novel idea to commercialize yet-to-be proven products and technology — but rather as a trail-blazing company that had already achieved many groundbreaking and game-changing milestones,” according to a separate complaint filed Thursday by the Securities and Exchange Commission.


Lawyers for Milton didn’t immediately respond to an email seeking comment. Nikola said in a statement that it has cooperated with the investigation and reiterated its commitment to start vehicle production. “Today’s government actions are against Mr. Milton individually, and not against the company,” it said.

Shares of the electric vehicle startup fell as much as 11% on Thursday, the biggest intraday drop since March 5, and touching the lowest level since May 26. The stock was down 8.1% to $13.01 as of 11:47 a.m. in New York.

Nikola’s sudden rise and dramatic fall started a trend. Electric-vehicle startups including Lordstown Motors Corp. and Canoo Inc. have gone down similar tracks, merging with special purpose acquisition companies and then struggling to hold up to scrutiny after going public.

Accused of overhyping his company’s technology and facing a regulatory probe, Nikola executive chairman Trevor Milton will exit. ‘The focus should be on the company,’ he said.

Sept. 21, 2020

Nikola’s market capitalization has plunged from almost $29 billion in June last year to about $5 billion currently. Milton is the company’s largest shareholder with about a 20% stake in Nikola, according to data compiled by Bloomberg.

Nikola went public through a reverse merger with a blank-check company in June 2020, a deal that made Milton into an overnight billionaire. At one point, the company’s shares ballooned to almost $80 apiece, giving it a market capitalization greater than Ford Motor Co. despite not generating any meaningful revenue.

Days after the startup’s shares debuted, Bloomberg News reported that Milton had exaggerated the capability of the company’s debut truck, the Nikola One. That story got the attention of an activist investor at Hindenburg Research, which published a detailed report in September accusing Milton and Nikola of deceiving investors.


Hindenburg congratulated investigators for holding Milton accountable for his statements in a tweet posted after he was charged.

The fallout from the accusations has forced Nikola to curtail its ambitions after setbacks such as a much-diminished deal with General Motors Co. and the cancellation of an electric-powered garbage truck program with Republic Services Inc.

Nikola initially denied the claims by Hindenburg, which was betting against its shares. But Milton resigned later that month, and in February the company said an internal review of claims about its technology concluded the startup and its founder made several inaccurate statements.

The SEC says Milton was “intensely focused” on the company’s stock price, calling and texting senior executives to “do something” on days when the shares were falling. He also “tracked the daily number of new Robinhood users who held Nikola stock,” according to the complaint.

Around the time of the merger, he hyped up a battery-powered pickup called the Badger — a truck the company had said in regulatory filings may not make it to production because it lacked a manufacturing partner.

Milton used his social media presence and appearances in interviews to announce new initiatives and changes, before informing the company, the SEC alleges.


“For example, on June 25, 2020, Milton sent a series of tweets from his personal account in which he claimed that Nikola would offer a drinking fountain in the Badger. This information came as a complete surprise to Nikola’s designers, engineers, and marketing personnel. When informed of the tweets, one engineer questioned whether ‘this [is] a joke,’ a marketing employee wrote that his ‘head is fuzzy,’ and a designer texted, ‘[u]hhhhh what.’”

Among the false and misleading statements Milton made, according to the federal indictment:

  • That the company had a “fully functioning” semi-truck prototype known as the Nikola One, despite the fact that Milton knew that the prototype was inoperable
  • That Nikola had engineered and built an electric- and hydrogen-powered pickup truck known as the Badger from the “ground up” using Nikola’s parts and technology, which he knew was not true
  • That Nikola was producing hydrogen and was doing so at a reduced cost, when “no hydrogen was being produced at all by Nikola, at any cost”
  • That Nikola had developed batteries and other important components in-house, when they were buying them from third parties
  • That reservations for Nikola’s semi-trucks were binding orders representing billions in revenue, when they were actually able to be canceled at any time “and were for a truck Nikola had no intent to produce in the near-term”

Nikola was among the first EV startups that attracted attention from investors last year as a possible rivals to market leader Tesla Inc., but which have fallen out of favor in recent months as questions are raised about their business models.

Lordstown’s boasts about nonbinding orders gave way to another attack by Hindenburg Research, which leveled accusations similar to the ones aimed at Nikola — that Lordstown had misled investors. Its founder stepped down in June, and the company confirmed this month that it is being probed by the Justice Department and the SEC.

Canoo rattled the market in March by announcing a hard pivot in its business plans to de-emphasize pursuits that were part of its original pitch to investors. Its cofounder and CEO resigned in April, and in May the company disclosed an SEC investigation.

Bloomberg writers Esha Dey and Craig Trudell contributed to this report.