Nikola Motor Company, the commercial electric vehicle manufacturer planning to build a factory in Coolidge, will return a $4.1 million loan it received from the U.S. Small Business Administration’s Paycheck Protection Program.
Founder and CEO Trevor Milton had defended the decision to apply for and accept the money because the company was awaiting federal approval of a $3.3 billion merger with publicly traded special acquisition company VectoIQ and had few other ways to raise money to pay employees in the meantime.
However, Milton announced in an April 29 tweet he’s now confident the merger will go through in a timely manner.
“Second-round merger comments came today & we are confident of timeline. Because we now have clarity on funding timeline, @nikolamotor is excited to repay #PPP so other businesses can survive. I hope others repay when possible too,” he said. The statement also appeared on the official Nikola Twitter account.
Media reports about Nikola receiving the loan, despite the multibillion-dollar value attached to its merger and Milton’s purchase of a $32-million estate in Idaho, drew criticism for the company, but Milton said in interviews and statements the company legitimately qualified for the money and wasn’t the reason other, smaller businesses didn’t get any.
“Nikola is exactly the kind of company PPP was created for. … We’re one-fifth the size of what SBA calls a small business (in the manufacturing sector). We’re a small company, we’re paying these people, we’re actually hiring people. That’s what it was really made for, to get this market going again,” Milton told CNBC.
The PPP program became controversial after companies generally not regarded as “small” were approved for large loans. Some have said they will return the funding, including AutoNation ($77 million) and Shake Shack ($10 million). Restaurant and hospitality businesses with fewer than 500 employees per location were permitted to apply.
The SBA began accepting a second round of applications April 27 after the initial $349 million appropriation ran out in less than two weeks, with the larger companies getting much of the blame. U.S. Treasury Secretary Steven Mnuchin has said all PPP loans over $2 million will be reviewed.
The loans will be forgiven by the federal government if all the recipients’ employees are kept on the payroll for at least eight weeks and the money goes toward paychecks, rent, mortgage or utilities.
Phoenix-based Nikola and New York-based VectoIQ announced the merger agreement in early March, and when approved will create a publicly traded Nikola Corporation. VectoIQ Acquisition Corp. was founded in 2018 for the purpose of buying or merging with transportation startups focused on electrification, autonomous vehicles or several other high-tech fields.
The merger is intended to speed up production of Nikola’s zero-emission vehicles in Coolidge to 2021. Nikola spokeswoman Nicole Rose said the factory’s groundbreaking remains on track for the third quarter of 2021, which was less certain before Milton’s recent announcement.
In 2019, Nikola purchased 400 acres in the Inland Port Arizona development, just south of Coolidge and east of Eloy, for a production facility projected for completion in 2022 and creation of as many as 2,000 new jobs in Pinal County by 2024.
Nikola reports more than $10 billion in lease reservations for its electric and hydrogen fuel-cell powered commercial trucks and semis, and its plans include building a worldwide network of hydrogen stations for those trucks.
The company has about 350 employees in Arizona, including some hired with the PPP funding, Milton said in the recent interviews.