Nikola began several cost-cutting measures as it wraps up its European exit. Earlier this year, after a disappointing first quarter, which saw the company have a higher-than-expected loss of $126 million on lower-than-expected sales of $11.12 million, CEO Michael Lohscheller said the company had "reprioritized the business" to focus on the North American market.
"We are selling our stake in the European joint venture to Iveco. This will reduce Nikola's cash spent and capital commitment and allow us to dedicate our resources to the task at hand in North America," Lohscheller said.
Nikola embarked on its joint venture with the Italian truck maker in 2019, and Lohscheller indicated the two companies intended to remain close business partners as Iveco still retained a "substantial stake" in Nikola. By exiting, the company gained $35 million in cash and 20.6 million shares of common stock back.
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It also paused production at its Coolidge, Arizona, plant to convert the assembly lines there to accommodate battery-electric and hydrogen fuel-cell trucks. Nikola plans to resume in July as it prepares to fill 178 orders for its hydrogen fuel truck. Meanwhile, to localize its supply chain, it finished the move of its battery manufacturing work—the former Romeo Power Inc. operations—from Cypress, California, to Coolidge.
With the new "reprioritized" business has come restructuring as the company also seeks to reduce nonessential cash spending elsewhere. In a move the company called "difficult but strategic," roughly 150 employees who previously worked on the company's European programs and about 120 employees based mainly in Arizona are being laid off. The decisions leave Nikola with about 900 workers and what executives called a "sustainable structure" for growth.
In dollar terms, the layoffs will save the company $50 million in personnel-related expenses and chip in toward the executives' goal of decreasing Nikola's annual cash spend to more than $400 million by 2024.
Nikola officials did not indicate when the job cuts would occur but said the company would help those affected with transition assistance.
Shares of Nikola (Ticker: NKLA) closed June 21 at $1.44 after climbing 9% on the day. Over the past six months, however, they are down more than 40%. The company's market capitalization is now about $1 billion.
