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NKLA Stock: Nikola Plans to Bleed Out $61.8 Million on EV Recalls

Shares of Nikola (NASDAQ:NKLA) stock are up about 10% today after the battery-electric and hydrogen fuel cell vehicle company reported its third-quarter earnings.

Back in August, Nikola made the decision to recall all 209 of the Tre battery-electric trucks that it had made due to the risk of fires occurring from leaked coolant in the truck’s battery packs. After further investigation, the company concluded that the risks were not just related to the leaked coolant. In its earnings, Nikola disclosed that it expects the recall and the battery repair for these trucks to total an estimated $61.8 million. This estimated figure will cover the cost to “re-engineer, validate, and retrofit the battery-electric trucks that were previously sold with an alternative battery pack solution.”

Over the next nine to 12 months, the cash disbursement from the recall and repairs is expected to total $38.1 million. The disbursement will be offset by collecting $10.7 million in accounts receivable and a $13 million cash contribution from selling the remaining Tre trucks in its inventory.

NKLA Stock: Nikola Expects to Shell Out $61.8 Million for Tre Truck Recalls and Repairs

Despite the recall, Nikola still received an order for 47 battery-electric trucks from a single dealer during the quarter. Deliveries of the trucks are expected to resume during Q1 2024.

Additionally, Nikola also offers a hydrogen-fuel truck, which is doing much better than its battery-electric truck. The company and its dealers currently have 277 non-binding orders from 35 customers for these vehicles.

“We think the competition is well behind us and believe there is white space for us to capture market share with the introduction of the Advanced Clean Fleets Rule, and incentives like HVIP and ISEF offering up to $288,000 and $408,000, respectively, per hydrogen fuel cell electric truck in California,” said CEO Steve Girsky.

During the quarter, Nikola produced zero trucks and shipped out three of them, compared to production of 75 trucks and the shipment of 63 trucks a year ago. The company reported revenue of -$1.7 million, falling short of the analyst estimate for $13.3 million. Nikola’s adjusted EPS loss of 30 cents also fell short of the estimate for a loss of 14 cents.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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