“Touch porcelain” Tesla capsload truck industry star Nikola is in the “scam” crisis.

Less than April, Nikola, known as “Tesla in the Trucking World,” appears to have burst the market cap bubble. ON Tuesday, GM said it would delay its acquisition of an 11 percent stake in Nikola, the U.S. electric truck maker, on short reports and allegations of fraud and sexual assault against founder Trevor Milton,media reported. Nikola shares closed down 7.4 percent at $17.88 on Tuesday, the company’s lowest close since it went public on June 4, while GM shares closed down 2.4 percent at $28.74.

Spokesmen for both companies declined to comment on the deal, citing ongoing negotiations.

“Tesla in the truck world” was hollowed out.

On September 8th GM said it would buy an 11 per cent stake in Nikola for $2bn. Under the deal, GM is expected to supply Nikola with battery and fuel cell technology and help design and manufacture Badger pickups.

The deal was warmly welcomed by Wall Street, with Nikola’s shares up 40.79 percent at $50.05 at the close of trading on the day of the announcement. Trevor Milton, Nikola’s founder and executive chairman, called the partnership with GM a “paradise partnership.” Mary Barra, GM’s chief executive, described the deal as a “win-win”.

Both companies are scheduled to complete the deal by September 30. However, things soon changed.

Just two days after the announcement, on September 10th Hindenburg Research, a short-selling agency, issued a reprehensible report accusing Milton of making false statements about the company’s technology in order to attract investors and other automakers. The report said Nikola had built on Milton’s “complex fraud” and challenged Milton’s past business, alleging that several of the companies it had founded had ended up in lawsuits or collapsed.

Ten days later, on September 21, Milton abruptly announced his resignation and agreed to give up about $166 million worth of shares and board seats.

Milton’s sudden resignation and fraud allegations reportedly triggered inquiries from the Securities and Exchange Commission and the Justice Department and sent Nikola’s stock plummeting. The company’s share price has fallen more than 60 percent since the deal was announced, making it far less attractive to GM.

However, the crackdown continues. According to CNBC, two women have filed sexual assault charges against Milton with Utah authorities, namely Milton’s cousin and office assistant. Although Milton was over 15 years old on both charges, the two “victims” were 15 and 17 years old, respectively.

Documents released by Nikola at the time of the announcement of the partnership show that 10 parties can terminate the transaction if it is not completed by December 3.

Allegations of fraud and sexual assault have raised significant concerns about due diligence by GM and Nikola.

GM declined to say whether it was aware of any allegations of fraud or sexual assault against Milton. Mary Barra earlier this month backed GM’s partnership with Nikola, saying it had conducted “appropriate due diligence” before announcing the agreement.

Nikola is understood to have been linked to GENERAL Motors by Steve Girsky, the former vice-chairman, who was appointed as the new executive chairman after Milton’s resignation. Girsky is the managing partner of VectoIQ, a special purpose acquisition company that led Nikola’s listing. After the deal was completed, he joined Nikola’s board of directors.

Girsky has yet to comment. Bosch, which has been Nikola’s automotive supplier partner since 2017, also declined to comment on its due diligence procedures for Nikola.

Imitating Musk? Not so good to do.

In 2018, Nikola sued Tesla for patent infringement, saying the Tesla Semi’s design is similar to that of Nikola One, a zero-emission hydrogen semi-truck issued by Nikola, Reuters reported. In the complaint, Nikola claims Trevor Milton designed the truck in his basement.

The Financial Times, however, tells the opposite story.

Milton bought the original Nikola One from the designer of RiMac Automobili, a Croatian electric car brand, the sources said. Milton met design director Adriano Mudri when he visited Rimac’s Croatian headquarters in 2015 and spent thousands of dollars on virtual 3D models and computer drawings for truck designs.

Tesla is understood to have countered last week that Nikola could not protect the truck design because it came from Mudri, not Milton.

A Nikola One spokesman said in an email that Nikola One was designed by the company and is patented. It is not un common to purchase designs from third parties during vehicle development, and although there is a buying behavior between Nikola and Mudri, he is not part of the design team and his designs are substantially different from Nikola’s final results.

The company’s self-driving technology has also been called into question. In a report, Hindenburg Research, a short-selling agency, said Nikola towed the truck to a mountaintop in a remote area and then filmed it rushing down the mountain as a validation of self-driving technology. Nikola responded by arguing that self-driving meant the truck itself was “driving” down.

These eye-popping allegations have shaken milton’s image. For years, he has tried to emulate Jobs and Musk, trying to connect his image with the company and using his personal charm to help it finance and promote it.

In a 2019 article, Forbes described Milton as a “lifelong garage fixer” who dropped out of college and then went on a missionary trip to Brazil. He said it was the trip that focused his attention on environmental issues. In 2010, he founded a company to design natural gas systems.

This is a very typical story about the image of the founder. By comparing Nikola to Tesla, Milton’s image is directly linked to Musk’s.

College dropouts, landing in an extremely complex field and then upending the industry overnight, sound familiar. Elizabeth Holmes, founder of blood testing start-up Theranos, used the same approach to avoid scrutiny and help the company reach a $9 billion valuation before it was proven to be fraudulent.

In the wake of the Theranos scandal, the era of founder worship seems to be drawing to a close. Two years later, however, milton’s image collapsed, suggesting that the model was not over.

Collapse without collapse? business model or save one’s life.

But does this mean that Nikola will follow Theranos’ lead and annihilate it?

When GM was preparing to buy a $2 billion stake in Nikola, the latter had little revenue and had never produced a truck. But news of the acquisition still briefly outstripped Ford’s.

To be sure, there’s a tech bubble, but it’s Nikola’s business model that attracts investors and other automakers. This model attracts celebrities, investors and industry giants in the automotive industry, but it also depends on significant technological advances and significant cost reductions.

When Trevor Milton founded Nikola in 2015, only a few startups were looking for ways to accelerate clean energy in the automotive industry. Milton saw the potential of hydrogen as a non-fossil fuel energy source for trucks, which led Nikola to initially plan to use batteries to power trucks. Hydrogen has not been actually tried in the automotive industry because of its cost.

The company raised the question of whether it would be more economical if companies that make hydrogen-powered vehicles also sold hydrogen-electric fuel. Selling fuel can pay for the construction of a network of hydrogenation stations, making hydrogen-powered trucks more viable.

“The only way to reduce costs is to integrate it with trucks, and when you buy our trucks, we’ll provide you with hydrogen service and all the fuel you need throughout the life cycle,” Trevor Milton said in a July podcast. “And you just pay for it by mile.”

This approach faces technical and cost challenges, and Nikola played down those details in a March speech, assuming that the company could buy electricity at a much lower price and that its hydrogen plant would be operating at full capacity. “Due to expected technological advances, savings are expected in 2025 and beyond,” it notes in a footnote to the presentation document. “

The business model that underpins Nikola is supported by the automotive industry. In addition to Mary Barra, GM’s chief executive, Stephen Girsky, a prominent figure in the automotive industry, Robert Bosch GmbH, a German auto parts maker, and Evco, a European truck maker, also spoke out. Of course, these companies don’t take much financial risk for Nikola. GM, for example, had planned to accept $2 billion worth of Nikola shares in exchange for battery and fuel cell technology, a deal that did not include any cash.

Another key element of Nikola’s marketing is its plan to cut the cost of producing so-called green hydrogen, which relies on renewable energy to produce hydrogen fuel.

Nikola said in an investor briefing this year that it could produce green hydrogen at $2.47 a kilogram, which analysts said would be difficult to achieve in the near term. Analysts at JPMorgan said in June that the cost of producing, storing and distributing green hydrogen was now too high, adding that electricity accounted for 80 percent of hydrogen production costs.

Nikola assumes that the company can buy renewable energy at 3.5 cents per kilowatt hour. According to the U.S. Energy Information Administration, industrial customers pay an average of nearly 7 cents for grid power, while commercial customers pay nearly 11 cents for grid power.

Hydrogen used in chemical production and many other industries is usually produced from coal or natural gas through a carbon emission process. On the other hand, green hydrogen produced from renewable sources eliminates carbon emissions because the electrolyte process removes hydrogen atoms from water molecules. Currently, green hydrogen accounts for only 1% of global hydrogen production.

However, the cost of producing wind and solar energy has fallen by about 40% over the past five years. According to data firm IHS Markit, the minimum production cost for green hydrogen is about EUR 4 per kilogram. IHS Markit expects the cost of green hydrogen to fall below 2 euros by 2030 as more projects are deployed on a large scale in areas where renewable energy can be purchased cheaply.

In addition, key industrial partners are still supporting the troubled company.

Bosch, the German industrial group, is still providing parts for the planned hydrogen trucks, Nikola finance executives said at an investor event recently that Bosch and CNH Industrial, the European company that plans to make Nikola Tre, remain partners, GM still plans to produce Badger pickups and provide technology for heavy trucks, and fleet owners who have placed orders for the second half of the trucks have not opted out, Reuters reported.

On Wednesday, the company said its production schedule and engineering plans were not affected by the recent scandal and were still on track. The announcement partly allayed widespread investor concerns about its business and its deal with General Motors. Nikola’s shares surged 31 percent on Thursday, rising 17.72 percent to $24.11 as of 7:59 p.m. EDT on Oct. 1.

“Furthermore, as long as Nikola’s business model is successful, it is likely to create a first-in-the-right advantage and a feedback loop that will lead to the sale of more trucks.”

Of course, rebuilding credibility is a top priority for Nikola today.