Nikola Motor loses another crucial deal, capping a catastrophic 2020

Nikola Motor, a would-be Tesla rival that has faced a string of humiliating disasters since entering public markets just over six months ago, announced another one this morning. Republic Services, a large waste management company, has canceled an order for 2,500 zero-emissions garbage trucks—a deal that Nikola at the time described as a “landmark.”

The announcement triggered the latest in a long series of bloody reckonings for Nikola investors. The stock had already slid from a peak of nearly $80 per share just after its Nasdaq debut in June to close at $16.83 on Dec. 22. The bad news sent it down another 9% by midmorning to just over $15 per share. Dan Ives, a Wedbush technology stock analyst, described the announcement as “another step backwards” for Nikola.

The Republic deal was first announced in August. Republic committed to an order of 2,500 refuse trucks based on the Nikola Tre truck platform, which will use either batteries or, in a version slated for 2023, a liquid hydrogen fuel cell. Nikola’s then-CEO, Trevor Milton, described the Republic deal at the time as a “game changer.”

Now, though, Nikola says, “after considerable collaboration and review, both companies determined that the combination of the various new technologies and design concepts would result in longer than expected development time, and unexpected costs. As a result, the program is being terminated, resulting in the cancellation of the previously announced vehicle order.”

It doesn’t take much reading between those lines to infer that Nikola may have overpromised what it was capable of. That would align with the company’s track record.

The August announcement projected that the Republic trucks would be road tested beginning in 2022. But Nikola completed only the first prototype of the long-promised Tre platform in November, meaning it would have to both perfect a brand-new truck and modify it for use as a refuse collector in just over a year.

And Nikola’s powertrain technology situation, as CNET’s Sean Szymkowski has pointed out, remains murky. The company has said the Tre’s powertrain is based on proprietary technology, but Nikola also says it will buy both fuel cell and battery powertrain technology from General Motors.

In the months since the Republic deal was announced, a long series of overstatements and alleged deceptions by Nikola and its cofounder Trevor Milton came home to roost. That began in September when a short-seller’s report claimed a number of deceptions by the company, some of which Nikola later acknowledged. Milton resigned as CEO, and the SEC has launched an inquiry into Nikola, including grand jury subpoenas. In November, a vital deal with GM was largely withdrawn. Nikola’s stock slid steadily during all of this.

The collapse is even more notable because it came in an investment and regulatory environment that has been incredibly bullish for electric vehicle startups. In September, California announced aggressive new rules requiring all passenger vehicles sold in the state to be zero-emission by 2035. Tesla, the obvious template for Nikola from the name on down, has been so successful it was added to the S&P 500 this week. Other EV startups that have delivered just as few vehicles as Nikola (that is, zero) have seen hot debuts and steady investor interest even as Nikola floundered.

It all adds up to a cautionary tale about the fine art of technology fundraising. Elon Musk showed that an ambitious vision can attract passionate adherents, even if you miss a deadline or five. But when faith is an unspoken pillar of your company’s investment thesis, the shadow of doubt can bring that passion to a swift end.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.