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Deal to have 44-mln-euro negative impact on Iveco’s Q1
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Iveco sees no impact on 2023 cash targets
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Shares open down in Milan
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Iveco to pay $35 mln in cash and buy 20 mln Nikola shares
(Adds context, updates share price)
MILAN, May 9 (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 loosens ties with 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 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 Milan-listes shares trimmed earlier losses and were down 0.7% in morning trading. 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, while it gets joint ownership of other technologies the two companies developed together.
Iveco’s overall investment, through available liquidity, will be partly in cash, for $35 million, and partly handing back to Nikola 20 million of the U.S. company’s shares, part of the stake Iveco holds.
Iveco will retain five million Nikola shares after the deal, a source close to the matter told Reuters.
($1 = 0.9084 euros) (Reporting by Giulio Piovaccari; editing by Gavin Jones, Louise Heavens and Bernadette Baum)
