The founder was sentenced to four years in prison and was determined to surpass Musk

Local prosecutors are asking for 11 years in prison.

Author: Qin Zhangyong, Truman

Sentenced, four years.

On Monday, Trevor Milton, the founder of Nikola, a new American car-making force, was sentenced to prison.

He was charged with defrauding investors and was fined $1 million.

Milton was once in high spirits and single-handedly built Nikola, a new energy truck company, and at that time had ambitions to use Tesla as a rival. He has publicly stated that there are few people in this world who surpass Musk, "I am one of them".

After going public in 2020, Nikola's market value once exceeded $30 billion, surpassing Ford and General Motors. But because of the bloody plot (posting fake propaganda videos, getting trucks rolling down the mountain), and the company has no products that can be beaten, it also defrauds investors.

Screenshot of the investigation report on the falsification incident Source: Hindenburg research

Milton was eventually convicted of fraud, and before the verdict was announced, he issued a statement pleading with the judge for leniency.

During the process, he choked up at one point, saying that he resigned as CEO of Nikolai at that time, not because of fraud, but to take care of his wife.

"I quit my job because my wife was seriously ill with a life-threatening illness and I chose my wife over money or power. ”

The four-year sentence was far lower than the 11-year sentence required by U.S. prosecutors in Manhattan District Court for Milton's sentencing, but Milton decided to appeal.

01

swept away 22 billion stocks, and sat on the name of fraud

Four years in prison was better than expected for Milton.

In October 2022, Milton was convicted by a jury of one count of securities fraud and two counts of wire fraud for lying to investors in the development of the Nikola electric truck in order to deliberately inflate the share price.

At the sentencing hearing at the time, his defense attorney said Milton did not attempt to defraud investors or intentionally harm anyone. Instead, "he just wants to be loved and praised like Elon Musk". Prosecutors immediately countered that he had lied to retail investors too many times.

U.S. federal prosecutors also recommended Milton to 11 years in prison and up to 60 years in prison, and the government also demanded a $5 million fine, the confiscation of a ranch in Utah, and compensation to investors.

Why did Milton end up like this?

The 41-year-old Milton is a legend who claims to have not graduated from high school and has founded a number of companies, such as the ADT security service franchise store and the car classifieds website uPillar.com.

However, the first two ventures were not successful, and the website company was not profitable. It was Nikolai who really brought Milton to the forefront.

In 2019, he had a new idea: to drive to Phoenix with a truck with a mix of natural gas and diesel fuel to reduce costs, and convince investors to pay for the idea.

A few months later, Milton was on a $16 million contract. At that time, the company had only 10 employees, and not only did it not achieve the effect of saving fuel, but also did not even have a few trucks.

This also means that Milton won a contract of tens of millions with just a few pages of PPT, which shows his ability.

Milton comes from a Mormon family and spent two years as a missionary in Brazil before starting his business. Some former employees believe that the mission has sharpened Milton's eloquence and sales skills, and for him, there is nothing that cannot be sold.

For example, designer Kathy Niederhauser, who worked at Milton's start-up uPillar.com, said that Milton is very energetic and a very good salesman, who is good at understanding people's ideas, "he knows what to say to convince you to join the team".

With his eloquence, Milton soon elevated Nikolai to a new level, with a market value of $34 billion at one point, and also deceived giants such as Bosch and General Motors into the pit.

But it soon became clear that something was wrong.

Hidenburg Research, a well-known short-selling agency, has released a short-selling report, calling Nikolai an "intricate scam", and the false propaganda mentioned in the report includes a promotional video of "Nikolai No. 1".

来源：Hidenburg Research

In 2018, Nikolai released a promotional video titled "Nikolai 1 in Driving," saying the truck had traveled 500-1,000 miles. But the fact is that Nikolai 1 was sliding down from a relatively flat hilltop, except that Nikolai deliberately tilted the camera angle to make the truck appear to be moving on its own.

And Milton graciously admitted the claim.

Then people gradually realized that it was impossible for Nikola to benchmark against Tesla, and Milton was not a Silicon Valley legend. Moreover, the other companies founded by Milton are basically chicken feathers, and there are usually many disputes and lawsuits.

In September 2020, Milton resigned from Nikolai, and also took with him $3.1 billion (about 22 billion yuan) worth of company stock.

After Milton left, Nikolai's condition fell even more.

02

Q3 only delivered 3 cars

Trevor Milton describes Nikolai as a "serious company with real products."

Judging from Nikola's official website, they do have products, and there are quite a few, including Tre hydrogen fuel cell trucks suitable for long-distance transportation and Tre pure electric trucks suitable for short distances, as well as energy replenishment business.

Among them, hydrogen fuel cell trucks are the core business of Nikola, which launched its first hydrogen truck, Nikola One, in 2016. At that time, Nikola officially said that a total of 7,000 orders for this hydrogen energy heavy truck had been received one month after the pre-order was opened.

According to the official website, Nikola's hydrogen energy truck has a maximum range of 500 miles (about 800km), can store 70kg of hydrogen, and only takes 20 minutes or less to replenish energy.

But in fact, from the establishment of Nikola in 2015 to the listing of the world's first hydrogen heavy-duty truck in 2020 at a valuation of $3.3 billion, Nikola has not sold a single car.

Even this year, Nikola has delivered only a handful of production vehicles, with only three trucks delivered in the third quarter of this year, compared to 63 in the same period last year. In the first three quarters of the year, production also fell to 96 from 125 in the same period last year, while deliveries fell from 111 to 79.

Nikola said in its Q3 earnings report that it has received more than 300 orders for new hydrogen fuel cell trucks.

Despite the confirmation of new orders, Nikolai's deliveries did not keep up, and more seriously, the sold cars were also recalled, for which Nikolai paid a lot of money.

It is reported that after a truck's battery pack coolant leaked and caused a fire, Nikola announced a recall of a total of 209 Tre pure electric trucks in August, and after identifying the cause of the accident, the official decided to replace the battery packs of all recalled vehicles, which made Nikola, which was already in the red, need to spend an additional $61.8 million.

Since the second half of this year, Nikola's development has become more turbulent, with recalls, losses, operational pressures, and executive departures all continuing to threaten Nikolai.

According to the financial report, Nikola's revenue in the first three quarters of 2023 was $24.31 million, nearly double that of $44.26 million in the same period last year. Net loss was $813 million, compared with a net loss of $562 million in the same period last year, an increase of 45% year-on-year.

Third-quarter revenue was even -$1.73 million, with a net loss of $426 million.

There is no doubt that Nikolai has reached the bottom, and whether the founder's imprisonment will cast another shadow on Nikolai is no longer of much significance to some extent.

After Trevor Milton left, Steve Girsky, a member of Nikola's board of directors and former vice chairman of General Motors, became president, and the CEO position changed many times in three years, and now Steve is also in charge.

What is embarrassing is that Trevor Milton was known as the "Musk of the truck world" back then.

Before Milton founded Nikola, Musk had named the company after the inventor Nikola Tesla, and Milton named his truck company Nikola, treating Tesla as a competitor.

It was this person who aspired to surpass Musk who directly gave up $166 million worth of equity when the company was exposed to problems, and decisively took $3.1 billion and left.

Now that Milton is facing prison again, "surpassing Musk" has naturally become a joke.