COOLIDGE, Arizona: Nikola Corporation has filed for Chapter 11 bankruptcy protection, marking another major collapse in the struggling electric vehicle (EV) industry.

The company, once valued at US$27 billion, is now set to sell its assets after years of financial instability, leadership changes, and safety setbacks.

The Arizona-based truck maker, which initially focused on battery-powered semis before pivoting to hydrogen-electric trucks, struggled to gain traction as high interest rates and weak demand hampered the broader EV market. CEO Steve Girsky acknowledged the difficulties, stating, "Our very best efforts have not been enough to overcome these significant challenges."

Nikola's downfall follows a pattern seen among other EV startups, including Fisker, Proterra, and Lordstown Motors, all of which have declared bankruptcy in recent years. Even industry leader Tesla reported its first annual sales decline in 2024, highlighting the pressures faced by the sector.

Despite ramping up hydrogen-powered truck production in 2024, Nikola continued to lose money on every vehicle sold. Fleet operators hesitated to adopt electric trucks due to high costs and infrastructure limitations, while a series of truck fires in 2023 led to a full recall and further damaged the company's reputation.

As part of its bankruptcy proceedings, Nikola will wind down operations but will continue limited support for existing trucks and hydrogen fueling infrastructure until the end of March. The company's manufacturing facility in Coolidge, Arizona, had the capacity to produce 2,400 trucks annually, but production never reached sustainable levels.

The financial strain became insurmountable. Nikola reported cash reserves of just $47 million as it entered bankruptcy, down from $198.3 million in September and $464.7 million at the end of 2023. The company listed assets valued between $500 million and $1 billion, with liabilities ranging from $1 billion to $10 billion.

Nikola's stock, which once soared above Ford's market capitalization, has plummeted, dropping 38% on Wednesday alone. The company had previously implemented a reverse stock split to avoid delisting from Nasdaq, but investor confidence continued to erode.

Adding to Nikola's troubles, founder and former CEO Trevor Milton was convicted of fraud in 2022 and sentenced to four years in prison. His departure, coupled with the damaging allegations from short-seller Hindenburg Research in 2020, dealt a significant blow to the company's credibility.

Industry analysts say Nikola's collapse is the result of increasing competition, operational struggles, and a cooling EV market. With its bankruptcy filing, another once-promising EV startup has fallen, raising further questions about the sector's future.