As a result, Nikola will be netting fresh equity funding amounting to US$525 million from outside institutional investors; P. Schoenfeld Asset Management, Fidelity Management & Research Company, and ValueAct Spring Fund.
The investment will be used for the advancement of its portfolio of vehicles and to develop a hydrogen charging station network in the U.S.
After the acquisition, the company is expected to go public in the second quarter of 2020 and will be listed on the NASDAQ exchange and will be traded under “NKLA”.
The company’s recent valuation is at US$3 billion after raising a series D round led by European heavy-duty automaker CNH Industrial. Now, the contract between Nikola and VectoIQ is valued at US$3.3 billion.
After the news, VectoIQ’s stock has surged up to 11.4 percent enabling the company to gain $1.18 to close at $11.50.
The joint company will be focusing on building the next generation of smart transportation.
“The world is transitioning to zero-emission platforms and Nikola is the leader for heavy-duty vehicles. We believe we have a differentiated business model built on economics, not government subsidies. We now need to double down and speed up the timelines and get to market,” said Trevor Milton, Nikola founder and CEO, in a statement.
Kim Brady, CFO at Nikola, is positive that good visibility into the future performance of the company is possible considering that it has already booked its manufacturing capacity within the first three years. Brandy will remain with the newly public company.
Stephen Girsky, the current CEO of VectoIQ and the former vice chairman of General Motors Corp., will be joining Nikola’s board of directors.
Founded in 2015, Nikola Corp is a Phoenix-based, five-year-old electric vehicle startup that has established a chain of heavy trucks powered by hydrogen fuel cells, devices that chemically convert the energy in hydrogen gas to electricity.
Electric heavy trucks using a proprietary new battery technology are on the process of development, it has attracted over US$250 million funding from CNH Industrial’s IVECO unit.
The company was known as Tesla’s potential competitor after producing 3 electric trucks –Nikola One, Nikola Two, and Nikola Tre against Tesla’s conceptual Semi truck.
It has secured over 14,000 pre-orders from industrial clients, which represent over $10 billion in potential revenue and will keep the company busy for at least 2.5 years.