
Nikola admits prototype was rolling downhill in promotional video - samizdis
https://arstechnica.com/cars/2020/09/nikola-admits-prototype-was-rolling-downhill-in-promotional-video/
======
rewtraw
How does a huge corporation like GM end up partnering with such an obvious
scam, especially post-Theranos? Where is the due-diligence? I saw NKLA stock
skyrocketing, and spent 5 minutes researching the company to find out why, and
all I found were massive red flags... how did GM miss them?

~~~
mafuyu
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
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-
count...](https://electrek.co/2018/08/25/tesla-semi-drove-across-country-
supercharger-elon-musk/)

[2] [https://electrek.co/2020/06/26/tesla-semi-spotted-used-
deliv...](https://electrek.co/2020/06/26/tesla-semi-spotted-used-deliver-
vehicles-end-of-quarter-push/)

~~~
112012123
In addition to the 11%, GM is also slated to earn up to 700 million dollars in
cash.

~~~
yholio
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
As of their last earnings report Nikola had almost exactly $700M in cash /
cash equivalents. Maybe GM just wants that :)

~~~
yholio
That's interesting. Without any product, what exactly are those sources of
cash earnings?

~~~
toomuchtodo
Reverse merger with a SPAC investment vehicle. They're not earnings, they're
investor funds.

[https://www.businessinsider.com/spac-biggest-blank-check-
dea...](https://www.businessinsider.com/spac-biggest-blank-check-deals-ackman-
chamath-palihapitiya-nikola-draftkings-2020-7)

------
DobryMorozov
This is the CEO that said their infotainment system is a HTML supercomputer.
He's now a billionaire and has cashed out 70 million with nothing more than a
fake prototype, lies and purchases from suppliers in which they give their
equity and call it a strategic partnership.

~~~
nograpes
I thought you were exaggerating but I found the truckinginfo article
([https://www.truckinginfo.com/330475/whats-behind-the-
grille-...](https://www.truckinginfo.com/330475/whats-behind-the-grille-of-
the-new-nikola-hydrogen-electric-truck)).

I am not involved in this world at all... but is this common? Can you really
expose your own ignorance in this way and also manage to keep investors?

~~~
sisk
From the linked article, here is the full quote:

> "The entire infotainment system is a HTML 5 super computer," Milton said.
> "That's the standard language for computer programmers around the world, so
> using it let's us build our own chips. And HTML 5 is very secure. Every
> component is linked on the data network, all speaking the same language.
> It's not a bunch of separate systems that somehow still manage to
> communicate."

~~~
DC-3
Sounds like the sort of guy to create a GUI Interface in Visual Basic to track
an IP Address.

~~~
ganoushoreilly
r/masterhacker material

------
keketi
From the article:

> Nikola's fortunes are now tied to the success of the Nikola Two, Badger, and
> other products. If those products are successful, it probably won't matter
> that the Nikola One was never drivable.

I'm trying to figure out what is the difference between Nikola One and Two. By
comparing [https://nikolamotor.com/one](https://nikolamotor.com/one) and
[https://nikolamotor.com/two](https://nikolamotor.com/two) there doesn't seem
to be any difference at all, apart from the pictures and videos. The specs are
the same, technology is the same, performance is the same, all of the
promotional text is the same, etc.

~~~
TheAlchemist
I thought you were joking, but it appears you're right ! I've also clicked on
the 'tre' model, and while there is no specs, and 'performance' numbers are
better , all highlights and inside pictures are the same. Amazing !

~~~
patd
I believe Tre is meant for Europe and Two is meant for the US. I suppose the
American one is larger

------
jeffbee
Once again we see that the short side is absolutely necessary to keep
companies in check. A company that whines about short sellers is broadcasting
its intention to act dishonestly. If you are long a company that puts out
press releases about a short conspiracy, run for the exits.

~~~
TearsInTheRain
> A company that whines about short sellers is broadcasting its intention to
> act dishonestly.

Lets not pretend short sellers arent willing to exaggerate their case against
in order to make a quick buck. They are talking their book afterall. I would
say whining is a sign of weakness more than dishonesty.

~~~
JumpCrisscross
> _Lets not pretend short sellers arent willing to exaggerate their case
> against in order to make a quick buck_

Sure. Both management and short sellers are. But structurally, the table is
tilted in favor of management.

------
BigCatStuff
I feel like Nikola is an example of why it might be bad for retail investors
to have access to early stage companies (pre-IPO or not). A traditional
venture capital investment has a better ability to do due diligence than the
general public does.

I'm not familiar with IPO listings through SPACs, but do these type of
listings go through as much DD as a traditional IPO listing? It seems that
every step along the way, NKLA had avoided close inspection of it's actual IP
and assets.

~~~
Miner49er
On the otherhand, if Nikola was successful and retail investors couldn't get
in early, it's an unfair advantage to the rich who are still allowed to
invest.

Nikola is actually a poor example of your point. Their stock price is still up
since they IPOed. A retail investor could sell their shares now and be fine.

~~~
an_opabinia
It would seem we would gain a lot from greater transparency in who owns
shares.

For example, Robintrack's data was very illuminating, almost every stock that
made it to the week popular list was full of retail bagholders:
[https://imgur.com/a/LbvUOdi](https://imgur.com/a/LbvUOdi)

Bet you thought I meant insiders. I'd run from stuff idiots buy!

~~~
quickthrowman
> It would seem we would gain a lot from greater transparency in who owns
> shares.

Major KODK shareholders:
[https://finance.yahoo.com/quote/KODK/holders?p=KODK](https://finance.yahoo.com/quote/KODK/holders?p=KODK)

Retail holds a small percent of pretty much anything, institutions dwarf
retail.

~~~
an_opabinia
Almost all of those institutions are holding shares on behalf of normal
"retail" people, not professional investors. The statistic you are seeing is
both in support of the claim of how much retail is a bagholder and in support
of the claim that the word "institutional" is misunderstood.

------
belval
From the video:

"Behold, the 1,000 HP, zero-emission Nikola One semi-truck in motion. Get
ready for the pre-production units to hit fleets next year in 2019 for
testing. The Nikola #hydrogenelectric trucks will take on any #semitruck and
outperform them in every category; weight, acceleration, stopping, safety and
features - all with a 500-1,000 mile range!"

People were arguing about how Tesla's semi was dead on arrival because of
these people.

~~~
Petrova
I question the 1000hp claim but concede that gravity is indeed zero-emission.

------
pkaye
This is the company with $36k in total revenues from installing a solar system
on the founders home. They list a bunch of products on their webpage. Do they
sell any of them or is it vaporware?

~~~
gibolt
The renderings are real, not vaporware. You can 2D print them

------
ckastner
This is a horrible press release. Horrible. The allegations Hinderburg made
are substantial, but a rebuttal as poor as this one is even worse than just
staying silent.

It would be somewhat understandable if they'd be trying to weasel out of one
or two issues.

But when all but a few of your rebuttals are "oh but in a strict technical
sense, we didn't make the claims that Hingerburg is challenging", like "we
never said the truck was under its own propulsion, the video was just called
"in motion", or "the contract that we claimed was worth 250 million had an
option that made it _potentially_ worth 250 million", then that just
underlines how much bullshit they have been spewing.

~~~
Petrova
Agreed, when I read their response I thought that what they didn't say spoke
volumes. Hindenburg's article covered every company in Trevor Milton's
professional career from dropping out at Utah Valley State to Nikola.
Hindenburg gave evidence that Milton perpetuated fraud at every single company
he was involved in and they only challenged the 250 million option at DHybrid.

I think the issue the legal team faces is that many of the things Trevor says
are clearly false and misleading.For example, he claimed multiple times that
Nikola is generating 3.5 megawatts of energy from solar panels on their roof.
There is simply nothing there, it is a bold lie so naturally it's not
referenced in their response at all.

The entire company is built around mysterious battery tech that's twice as
efficient as Tesla's batteries and hydrogen production at 18.75% of current
cost. That is the central fraud in the company just as the unrealistic notion
of droplets of blood for reliable testing was at Theranos.

Eventually, if Nikola persists in trying use hydrogen they will face the
technological and economic reality they've been hiding from investors and the
company will fail.

~~~
misiti3780
Milton is obviously an idiot, crazy and delusional, if he didnt realize
someone could prove him wrong via google earth.

------
rblatz
What terrifies me the most is that supposedly this company is planning to
store a shit ton of hydrogen in the middle of the Phoenix metro area.

Nothing that I've heard about this company makes me think it is at all
equipped to properly handle that responsibility, and I'm adjusting my behavior
to stay clear of that part of town.

~~~
blantonl
The chief of the hydrogen division at Nikola is Trevor's brother. His industry
previous experience consists of pouring concrete driveways. Phoenix should be
fine.

------
fma
Not to defend Nikola, but people are quick to forget that iPhone's first
presentation was a lot of smoke and mirrors?

"Hours of trial and error had helped the iPhone team develop what engineers
called “the golden path,” a specific set of tasks, performed in a specific way
and order, that made the phone look as if it worked."

[https://gizmodo.com/the-iphones-first-demo-was-buggy-as-
hell...](https://gizmodo.com/the-iphones-first-demo-was-buggy-as-
hell-1441324523)

~~~
jryle70
That's common for tech demos, especially software demos. Hardcoded values,
scripted paths, etc.

Nikola's presentation was something else:

> "We will have a chain on the seats to prevent people from coming in just for
> the safety. I don't want someone to end up doing something and driving this
> truck off the stage," Milton said. "This thing fully functions and works,
> which is really incredible."

He specifically boasted that it was a fully working machine. That's a lie.

------
sparrish
So I guess they subscribe to the 'fake it till you make it' philosophy of
start ups?

~~~
onepointsixC
Considering their founder bought a ranch which cost tens of millions of
dollars, I think they're following the fake it till you can cash out WeWork
model.

------
anigbrowl
I really think that false statements made by commercial entities should be
prosecuted as fraud. It's one thing to engage in vague sales talk like 'the
new SuperTech Blinkenlights will turbocharge your actuarial skydiving
research!!', but when you're making claims of having actually existing
technology (which you may not be ready or willing to patent, but do want to
raise money with), the public has an interest in protecting itself from fraud.

Perhaps there should be some requirement to pay for independent professional
witnesses, sort of like observers who validate Guinness world records as
having met some (negotiable) standard of existing in the real world while
being bound not to comment on the specifics of how it was achieved.

~~~
carriganisms
This is called due diligence, and it's on the investor to perform their own
due diligence. For a product that isn't commercially available to consumers
yet, due diligence should be enough.

In the case of something like Theranos, I thoroughly agree. Oversight of a
commercially available product, especially one with health implications, is
definitely necessary. Although it seems even these systems failed in the
Theranos case.

~~~
imglorp
There is actually the legal test of a Reasonable Person.

If they say they're going to sell trucks, and they present a truck doing truck
things (moving), most people would assume it's a complete truck as portrayed.
An empty shell is just fraud in the court, hopefully.

~~~
awb
Agreed, but a reasonable person would also ask: "how well does it drive up
hills?", "what are it's miles per charge?", etc. at which point the truth is
uncovered.

It's not a good look, but you also shouldn't be investing based on what
amounts to a commercial. This should be another stain for the company and
another warning sign for investors, but we don't need a law against misleading
promo videos because almost all are short on information and high on emotion.
It's the investor's job to get the information behind the video.

------
xwdv
I opened a massive short position on NKLA today after seeing it up almost 10%.
Uneducated speculators that have forgotten the lessons of Theranos are fueling
its rise, and for them it will end in tears. For me? I will make a fortune.

~~~
wh1t3n01s3
Good call! NKLA is down 8% aftermarket

~~~
RandyRanderson
I see a long TSLA / short NKLA position much safer than just shorting NKLA.

I think the question might just be the ratio of capital.

------
projektfu
After Elon named his company Tesla, along comes a scam with their machine
called Edison. Not to be outdone, a putative truck company circles back and
calls itself Tesla’s first name, Nikola.

~~~
itsoktocry
> _After Elon named his company Tesla_

Tesla Motors was a thing before Elon was involved.

~~~
DaiPlusPlus
Tesla coils too!

~~~
liability
Those have a right to the name though; Nikola Tesla invented them.

------
sytse
Nikola responded to
[https://hindenburgresearch.com/nikola/](https://hindenburgresearch.com/nikola/)
which is a solid read.

------
PaulHoule
Let me get this straight:

Did "Hindenberg" really say that the hydrogen fuel cell wasn't working?

------
vikramkr
There's a part of me that's happy that there's finally a nice example of
technology fraud to point to that's a non-medical tech company. After
Theranos, the takeaway has been "biotechs, especially diagnostic companies,
especially anything involved with microfluidics, especially if founded by a
white female engineer[0], are frauds." Theranos has been explained away as
something that happens when Silicon Valley invests in biotech (which is just
so stupid - Genentech was founded in the bay...), so instead of using it as an
opportunity to rethink what is incentivized and how charisma is rewarded over
capability, people instead decided that by adopting a bunch of flawed
heuristics, they could avoid the issue forever. Well, here you go! Theranos 2:
electric Boogaloo! Turns out Fraud is not industry specific! Who knew!?

[0]I know a founder fitting that description that was put through hell because
of all the pattern matching. And in my own startup, there was a point where I
just straight up stopped mentioning microfluidics because of all the nonstop
pattern matching and the dumb questions that resulted. Its so frustrating.

------
trhway
>Our investigation of the site and text messages from a former employee reveal
that the video was an elaborate ruse—Nikola had the truck towed to the top of
a hill on a remote stretch of road and simply filmed it rolling down the hill.

couldn't they just put in battery&motor from golf cart? Or, god forbid, from a
Tesla :)

>In October 2019, Nikola announced it would revolutionize the battery
industry. This was to be done through a pending acquisition, but the deal fell
through when Nikola realized (a) the technology was vaporware

you don't say.

Looking at all that gold rush and Alibaba prices i wonder may be i should
start a EV company too. Don't need $20B, i think i can retire comfortably with
3 orders of magnitude less :)

------
kevin_thibedeau
On the bright side. The brakes must be working.

~~~
DudeInBasement
Probably not. They just use friction.

------
ravenstine
It's interesting to me that they didn't use CGI. Maybe they were afraid people
would notice? But tons of car ads are totally CGI.

Back when I was at Dev Bootcamp, before that shut down, some car company came
to shoot a car commercial in front of the building. People were expecting to
see some cool cars and action on the scene, but I rightly predicted that there
would be filming of backdrops, some green screens here or there, all done in a
few hours, and no actual cars.

Having looked at the video, I see no reason why they needed a real truck, even
if they actually have a prototype. Are they just cheap as f __*?

~~~
lostgame
>> But tons of car ads are totally CGI.

As silly as this sounds, it very well may be a cost factor - I am desperately
seeking the article but I have read that car commercials actually use a highly
advanced form of CGI that is incredibly, jaw-droppingly expensive.

I mean, we could assume they just wanted to be honest and show the real thing;
but we obviously know they had no interest in being honest whatsoever and it
was obviously designed to mislead.

~~~
DaiPlusPlus
Car ads use CGI because they need to a lot of localisation and customisation
for trim-level specific shots. Making a CGI car ad from scratch might cost
$10m+, but you can now do a new shot or make small changes in a day for a few
thousand dollars.

If you need a one-off video, it’s cheaper to not use CGI.

------
mandeepj
Have you seen this video from Nikola -
[https://www.youtube.com/watch?v=LbNopvpSbzU](https://www.youtube.com/watch?v=LbNopvpSbzU)
?

It does not look fake.

~~~
giarc
Wait, they also make a jet ski?!

~~~
JaggedJax
Correction, made a prototype which can only jet ski downhill.

~~~
dredds
I'm looking forward to their electric / hydrogen plane, correction, glider.

------
epanchin
Why does the truck have a grill/air intake on the front?

~~~
ericd
H2+O2 -> H2O+Energy

Also, probably radiators for the above.

------
leto_ii
What Nikola seems to have done is outrageous, but am I reading it correctly
that the short-seller was trading on insider information?

~~~
soared
There are a lot of high profile traders who do tons of research, make trades,
then "release" their information. The research they do is all from publicly
available sources (Ie they don't interview employees), so its not insider
trading.

Bill Ackman is probably the most famous person doing this.

~~~
leto_ii
I see, thanks.

------
tus88
Looks very similar to the Tesla Semi.

~~~
fma
You mean Tesla Semi looked similar to Nikola One? As Tesla Semi was announced
one year after Nikola One and there was/is even a lawsuit.

[https://electrek.co/2020/04/22/tesla-semi-design-lawsuit-
mov...](https://electrek.co/2020/04/22/tesla-semi-design-lawsuit-move-forward-
nikola-motors-weaker/)

------
easton_s
Who here hasn't faked a demo? And this is a very different case then Theranos.
They faked the demos and never had a working product. Nikola faked the demo
and now has an actual working truck.

Don't lie. You've faked a demo before.

~~~
Voloskaya
The mess they are in isn't just about faking one demo one time when they were
2 employees in a basement building a landing page. They consistently lied
about basically everything, including key and core components.

"In October 2019, Nikola announced it would revolutionize the battery
industry. This was to be done through a pending acquisition, but the deal fell
through when Nikola realized (a) the technology was vaporware and (b) the
President of the battery company had been indicted months earlier over
allegations that he conned NASA by using his expense account to procure
numerous prostitutes.

Nikola has never walked back claims relating to its battery technology.
Instead, Trevor continued to publicly hype the technology even after becoming
aware of the above issues. The revolutionary battery technology never existed
– now, Nikola plans to use GM’s battery technology instead."

"Inexpensive hydrogen is fundamental to the success of Nikola’s business
model. Trevor has claimed in a presentation to hundreds of people and in
multiple interviews to have succeeded at cutting the cost of hydrogen by ~81%
compared to peers and to already be producing hydrogen. Nikola has not
produced hydrogen at this price or at any price as he later admitted when
pressed by media." [1]

Tell me again how this is not like Theranos?

[1]
[https://hindenburgresearch.com/nikola/](https://hindenburgresearch.com/nikola/)

~~~
fma
How about a company that faked a working phone? A phone where there is only 1
set of workflow that actually was successfuly. A phone that could not play an
entire song. And because the CEO knew the phone would crash, even during the
only workflow that worked, he had multiple phones on stage that he would swap
out when it crashed.

Is that also a lie? Because that's exactly what Steve Jobs did when he debuted
the iPhone.

[https://gizmodo.com/the-iphones-first-demo-was-buggy-as-
hell...](https://gizmodo.com/the-iphones-first-demo-was-buggy-as-
hell-1441324523)

~~~
Voloskaya
> Is that also a lie?

How is that a lie? On release day, when you got your iPhone, you got exactly
what was demoed, not one feature was missing. As an Apple investor I would
have no way to know what did and didn't work during that demo, and I wouldn't
care because I got exactly what I was promised. I also would not expect
everything to work, otherwise why would the release date be 9 months after the
demo? And when making that demo, Steve Jobs was convinced (and he made sure he
was right) that everything he was demoing would be ready by launch. He did not
pretend that the iPhone could do something he very well knew wasn't possible.

Trevor Milton promised things that he knew he would not deliver. He promised
things that his company did not do, was not planning to do and did not have
the capability to deliver. Where is the Nikola One today? Where is that
revolutionary battery that he promised even once he cancelled the deal to buy
that (non-existent) tech? Where is that hydrogen he said he was already
producing years ago?

Those two things are not remotely comparable.

