Nikola Corporation (NKLA.O), once hailed as a promising electric vehicle (EV) manufacturer, has filed for Chapter 11 bankruptcy protection. The move comes as the company faces significant challenges, including poor market demand, rapid cash depletion, and mounting financial pressures. Nikola now plans to sell its assets as part of an effort to wind down its operations, joining other EV startups in the growing wave of bankruptcies in the sector.

The bankruptcy filing marks the end of a tumultuous period for Nikola, which at one point boasted a market capitalization of $27 billion in 2020. The company’s valuation has since plummeted to under $50 million. Nikola’s struggles were compounded by leadership changes, safety concerns—such as the recall of its electric trucks following fire incidents in 2023—and high production costs. Despite efforts to ramp up production, including the launch of hydrogen-powered trucks, Nikola has continued to lose significant sums on every vehicle sold.

CEO Steve Girsky attributed the company’s downfall to various macroeconomic factors, including high interest rates and a difficult operating environment. “Our very best efforts have not been enough to overcome these significant challenges,” he stated. The company, which manufactures its trucks in Phoenix, Arizona, delivered its first vehicle in December 2021 but has struggled to build a sustainable business model.

The bankruptcy comes amidst broader challenges in the EV sector. Rivals such as Fisker, Proterra, and Lordstown Motors have also filed for bankruptcy in recent years as capital-intensive operations failed to secure the funding necessary to survive. Tesla, the sector’s leader, also reported its first drop in annual sales for 2024, further highlighting the difficulties faced by the industry.

Nikola’s assets are estimated to range between $500 million and $1 billion, but its liabilities could total as much as $10 billion. The company is left with just $47 million in cash as of the filing, a sharp decline from its cash reserves in the previous year.

For more details, visit Reuters.