On Tuesday, Italian truck maker Iveco Group (IVG.MI) said it would purchase Nikola Corp’s (NKLA.O) joint venture to develop battery electric and fuel cell heavy-duty vehicles.
Iveco will end its joint venture with Nikola after founding it in 2019 to enable the Italian business. Part of CNH Industrial (CNHI.MI) and a latecomer to electrification, to catch up with big European rivals like Daimler Truck (DTGGe.DE) and Volvo (VOLVb.ST).
Nikola reported in February that sluggish demand had slowed delivery of its battery-powered vehicles, that its financial reserves had depleted, and that it projected 2023 gross margins to be deep in the negative.
Despite Nikola’s issues, the Ulm, Germany-based venture’s battery electric trucks are already in use in the U.S. and Europe. In addition, fuel-cell hydrogen hybrid trucks are coming next year.
In a statement, Iveco said the purchase announced on Tuesday would have a 44-million-euro ($48 million) one-time negative impact on its first-quarter income statement, which it intended to absorb through cash flow generation without modifying its cash flow objective for this year.
Its shares were down 1.7% in early trade, among the weakest performance in Italy’s blue-chip basket. Iveco’s first-quarter earnings are due Thursday.
Iveco would not be affected by Nikola’s donation, according to Equita analyst Martino De Ambroggi.
Iveco will develop and market its battery-electric (BEV) and fuel-cell-electric (FCEV) trucks in Europe. At the same time, Nikola will focus on North America, the two companies stated in a joint statement.
For the jointly developed BEVs and FCEVs, Iveco will have unfettered access to and continue developing vehicle control software. In addition, Nikola will receive a portion of Iveco’s North American technology license and component supply.
Using existing liquidity, Iveco will invest $35 million in cash and 20 million Nikola shares.
