MILAN (Reuters) -Iveco Group will buy full ownership of its joint venture with U.S. start-up Nikola Corp which develops battery electric and fuel cell heavy-duty trucks, the Italian truck maker said on Tuesday.
With the move, Iveco will cut ties with the troubled Nikola, after forming the joint venture in 2019 to help the Italian group, then part of CNH Industrial and a latecomer to electrification, catch up with large European rivals such as Daimler Truck and Volvo.
Nikola said in February poor demand had hurt delivery of its battery-powered trucks, that its cash reserves had dwindled and that it expected 2023 gross margins to be deep in the red.
Despite Nikola’s problems, battery electric trucks developed by the venture based in Ulm, Germany are already circulating in the U.S., while orders are being collected in Europe. Fuel cell hydrogen hybrid trucks are expected to hit the road next year.
Iveco said in a statement that the deal announced on Tuesday would produce a 44-million-euro ($48 million) one-off negative impact on its first-quarter income statement that it expected to absorb through cash flow generation, without changing its cash flow target for this year.
Its shares were down 1.7% in early trading, among the worst performers within Italy’s blue-chip basket. Iveco will report its first-quarter results on Thursday.
Equita analyst Martino De Ambroggi said the move would not have a relevant impact on Iveco as any contribution from Nikola was expected only beyond the group’s current business plan.
As part of the agreement, Iveco will focus on Europe for the further development and commercialisation of its own battery electric (BEV) and fuel cell (FCEV) electric trucks, while Nikola will concentrate its operations in North America, the two groups said in a joint statement.
Iveco will have free access to and continue developing vehicle control software for the jointly developed BEVs and FCEVs. Nikola will be granted some of Iveco’s technology licence for North America and related component supply.
Iveco’s overall investment, through available liquidity, will be partly in cash, for $35 million, and partly in shares, with the purchase of 20 million Nikola shares.
Iveco will retain a “meaningful” amount of Nikola shares, they said.
($1 = 0.9084 euros)
(Reporting by Giulio Piovaccari; editing by Gavin Jones, Louise Heavens and Bernadette Baum)