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Electric truck maker Nikola Corporation has filed for Chapter 11 bankruptcy protection as it struggles with financial challenges and a shrinking market for electric vehicles.

The Phoenix-based company announced the move on Wednesday, stating that it intends to sell most or all of its assets to maximize value and ensure an orderly wind-down.

The decision follows mounting losses, difficulty raising funds, and declining investor confidence.

Nikola, once seen as a leader in the electric truck industry, has faced numerous setbacks, including leadership changes, financial struggles, and legal troubles.

The company, which went public in 2020 through a special purpose acquisition company (SPAC), had high ambitions but failed to sustain its momentum.

Its stock price, once soaring, plummeted as investors lost confidence. The company reported a net loss of nearly $200 million in the third quarter of last year alone, AP News said.

CEO Steve Girsky acknowledged the challenges, stating, "Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate."

He emphasized that despite recent efforts to raise funds and cut costs, the situation remained unsustainable. "The Board has determined that Chapter 11 represents the best possible path forward under the circumstances," Girsky added.

Nikola's financial difficulties reflect a broader trend in the electric vehicle market. Several EV startups, including Fisker, Proterra, and Lordstown Motors, have also filed for bankruptcy in recent years.

Nikola Files for Bankruptcy Amid High Interest Rates and Sluggish EV Demand

High interest rates and sluggish demand have made it harder for these companies to secure the funding necessary to maintain operations.

Fleet operators, hesitant to invest in electric trucks due to infrastructure challenges and economic uncertainty, have further complicated the situation.

Nikola's troubles extend beyond financial woes. The company's founder, Trevor Milton, was convicted of fraud in 2022 for misleading investors about the company's technology.

Prosecutors revealed that a promotional video showing a Nikola truck in motion had been staged by rolling the vehicle down a hill.

Milton resigned in 2020 amid controversy, and Nikola later paid a $125 million settlement to the Securities and Exchange Commission (SEC) without admitting wrongdoing.

Despite its struggles, Nikola has continued limited operations. The company produced hydrogen-powered fuel-cell electric trucks in 2024 but struggled to generate sales.

It now plans to maintain support for existing vehicles and hydrogen fueling operations until at least the end of March, subject to court approval.

However, further funding will be required to sustain even these minimal operations beyond that period.

According to Reuters, Nikola filed for bankruptcy protection in the US Bankruptcy Court for the District of Delaware and reported assets valued between $500 million and $1 billion, with liabilities ranging between $1 billion and $10 billion.

The company currently holds approximately $47 million in cash. It is seeking court approval for an auction and sale process to determine the future of its remaining assets.

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Bankruptcy