In June 2020, Nikola Corporation went public through a SPAC merger and within days achieved a market capitalization of $34 billion — briefly surpassing Ford Motor Company. The company had never sold a single truck. It had never generated meaningful revenue. Its flagship hydrogen-electric semi-truck existed primarily as a prototype that, as the world would soon discover, couldn’t actually drive under its own power. Yet investors, intoxicated by the electric vehicle mania that had turned Tesla into the most valuable automaker on earth, poured billions into a company whose founder would later be convicted of fraud.
The Nikola story is Silicon Valley’s “fake it till you make it” ethos pushed to its absurd extreme — a company that didn’t fake it till it made it, but simply faked it.
Trevor Milton: The Hype Machine
Trevor Milton founded Nikola Motor Company in 2015 in Salt Lake City, Utah. A college dropout with a background in internet sales businesses, Milton had no engineering credentials and no automotive experience. What he had was an extraordinary talent for promotion and a keen understanding of the narrative that investors wanted to hear: that the trucking industry was ripe for disruption, that hydrogen fuel cells were the future, and that he was building the Tesla of heavy trucks.
Milton was relentless on social media, posting videos, mockups, and bold claims about Nikola’s technology. He announced partnerships with major companies, promised revolutionary battery technology with five times the energy density of existing cells, and unveiled truck designs that looked stunning in renderings. The company’s name itself — Nikola, after Nikola Tesla — was a deliberate play on the Tesla brand, positioning the startup as its heavy-duty counterpart.
In November 2019, Milton unveiled the Nikola Badger, a hydrogen-electric pickup truck that would compete with Tesla’s Cybertruck and Ford’s F-150 Lightning. He claimed it would have a range of 600 miles on hydrogen and 300 miles on battery alone. The Badger generated enormous excitement — and enormous pre-orders from consumers who placed refundable $250 deposits.
The SPAC and the $34 Billion Valuation
In March 2020, Nikola announced a merger with VectoIQ, a special purpose acquisition company (SPAC) led by former General Motors vice chairman Steve Girsky. The SPAC route allowed Nikola to go public without the scrutiny of a traditional IPO — there was no full prospectus, no rigorous SEC review of the company’s claims, and no underwriter staking its reputation on the offering.
When trading began on June 4, 2020, the stock exploded. Within a week, Nikola’s market capitalization hit $34 billion. Milton, whose stake was worth over $8 billion on paper, was suddenly one of the richest people in America. General Motors announced a $2 billion strategic partnership to build the Badger pickup. The stock soared further.
Then Hindenburg Research published its report.
The Hindenburg Report: “An Intricate Fraud”
On September 10, 2020, the short-selling research firm Hindenburg Research published a devastating 67-page report titled “Nikola: How to Parlay an Ocean of Lies into a Partnership with the Largest Auto OEM in America.” The report alleged that Nikola was “an intricate fraud built on dozens of lies” and presented evidence for each claim.
The most damaging revelation concerned a promotional video Nikola had released in January 2018 titled “Nikola One in Motion.” The video appeared to show the company’s hydrogen-electric semi-truck driving under its own power on a desert highway. Hindenburg’s investigation revealed that the truck wasn’t driving at all — it had been towed to the top of a hill and rolled down a gentle slope while cameras filmed it from angles designed to disguise the fact that it was simply coasting downhill. Nikola had never disclosed that the truck in the video was not operating under its own propulsion.
The report also alleged that Nikola’s claimed “breakthrough” battery technology didn’t exist, that the company had purchased components from third parties and presented them as proprietary innovations, that Milton had made false claims about the company’s hydrogen production capabilities, and that multiple demonstrations had been staged or fabricated.
The Collapse
Milton initially denied everything, calling the Hindenburg report a “hit job” by short sellers. But the evidence was overwhelming. On September 20, 2020 — just ten days after the report — Milton resigned as executive chairman. General Motors renegotiated its partnership, effectively killing the Badger pickup. The stock cratered.
The SEC and the Department of Justice opened investigations. In July 2021, Milton was indicted on three counts of criminal fraud — two counts of securities fraud and one count of wire fraud — for lying to investors about Nikola’s technology, products, and capabilities. The trial, held in October 2022, featured testimony from former employees and partners who described a pattern of systematic deception orchestrated by Milton personally.
On October 14, 2022, Milton was found guilty on all three counts. In December 2023, he was sentenced to four years in federal prison and ordered to pay $165 million — including $100 million to defrauded investors.
The Lessons of Nikola
Nikola was a fraud enabled by the SPAC boom — a window in time when companies could access public markets with minimal scrutiny, when retail investors were pouring money into anything connected to electric vehicles, and when the gap between reality and valuation had stretched to breaking point. The company exploited a regulatory loophole (SPACs’ exemption from certain liability provisions that apply to traditional IPOs) and a market mania (the EV bubble of 2020-2021) to achieve a valuation that bore no relationship to its actual capabilities.
The fact that General Motors — one of the most sophisticated automotive companies in the world — entered a $2 billion partnership with Nikola without apparently verifying that the company’s trucks could drive under their own power speaks to the collective delusion that gripped the market. When the hype is loud enough, even professionals stop asking basic questions.
Go Deeper
📚 Ludicrous: The Unvarnished Story of Tesla Motors by Edward Niedermeyer — While focused on Tesla, this book provides essential context for the EV mania that made Nikola’s fraud possible.
📖 Explore more on our Recommended Reading page.
More From The Ledger
- Theranos — Another founder who faked the technology
- WeWork — A $47 billion valuation built on narrative, not numbers
- FTX — The crypto fraud that fooled the world’s smartest investors
Browse all stories on our Stories page.
🔔 Subscribe to The Ledger on YouTube for new investigations every week.