Shares of General Motors Corp. rose to a more than six-month peak after the company completed a $2 billion equity ownership in Nikola Corp. in a strategic cooperation announced this week. General Motors Corp.'s shares were at $32.38 each in premarket buying Wednesday.
General Motors' paper added 6 percent before the start of the U.S. trading day Tuesday after it said late Monday it would manufacture Nikola's new hydrogen fuel-cell powered Badger pickup and contribute technology by end of 2022 and in turn would get an 11 percent share in the startup.
The Detroit-based motor-vehicle manufacturer isn't spending any cash on the deal, it said in a statement.
Shares of Nikola rose 30 percent on the news. Nikola's shares had climbed as much as 53 percent while General Motors moved up more than 9 percent during premarket sessions. General Motors' shares closed at $32.38 Tuesday while Nikola settled at $50.05 and were trading at $53.05 in premarket activity Wednesday.
The agreement will boost Nikola's reputation as a motor-vehicle-industry player with its association with one of the biggest names in the game. The deal is also expected to help Nikola start making sales while General Motors - the biggest American vehicle producer by sales - expects to gain more than $4 billion in benefits. On top of the financials General Motors will get a seat on Nikola's board in exchange for products, services and transactions.
According to General Motors' chief executive officer Mary Barra, integrating the company's technology to the robust category of commercial vehicles is critical in achieving General Motors' vision for a clean environment. For Trevor Milton, Nikola executive chairman and founder, the partnership allows it to have greater access to General Motors components for all its programs - including General Motors' fuel-cell and battery technology.
General Motors and Nikola expect assembly of the Badger to start about late 2022. Nikola said it might start selling the truck in early December that year. Barra said its collaboration with Nikola went beyond the pickup and included the Phoenix-based group's semi-articulated lorries which she said were a "huge growth opportunity" for General Motors.
