Nikola Corporation SWOT and PESTLE Analysis

Strength

1. Multiple strategic partnerships with well-established companies: Nikola is a new company without any products on the market. Most of their product portfolio are under development or waiting for approvals, so it is important for a nascent company like Nikola to enter into strategic partnerships with bigger companies to attract potential investors. Nikola has a Commercial Letter Agreement with Nimbus, a subsidiary of Bosch. Under this agreement, Nikola will equip its autonomous driving trucks with components from Bosch. Nikola will also source other services like inverters, fuel cell batteries, etc. from Nimbus, at pre-negotiated prices. Nikola signed the European Alliance Agreement with CNHI/Iveco in 2020 to enter into a partnership to develop and manufacturer BEV and FCEV trucks in Europe. Both parties will contribute equally to the project, taking on 50% of the total expenses. Under the European Supply Agreement, Nikola Iveco JV was granted exclusive right to supply BEVs and FCEVs in Europe and under the North America Supply Agreement, Nikola Iveco JV could do the same in North America. Nikola also has an agreement with Anheuser-Busch where AB agreed to lease hydrogen-fuel trucks and tractors from Nikola. Nikola’s controversial MoU with General Motors was finally signed on November 29, 2020 under which GM agreed to integrate their Hydrotec-fuel system into Nikola’s commercial trucks.

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Weakness

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Opportunity

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Threat

1. Shortage of skilled workforce in developed economies: Employees are a valuable resource for Nikola Corporation because a large portion of them are highly skilled and specially trained. Employee compensations have to be higher in order to retain employees. The company conducts regular workshops to upskill their employees. As Nikola is primarily a manufacturing company, they need a lot of skilled workers for engineering, working in factories, information technology, cybersecurity, flight operations, strategy and management. In 2016, technology jobs in the US outnumbered skilled workers by 3 million and according to estimates, by 2030, the global shortage of skilled workers will reach 85 million, leading to loss in revenues worth $8.5 trillion. As more and more companies are adopting digitalization, the demand for skilled tech workers continues to rise. Some countries have started offering incentives beyond money to attract workers. Greece has partnered with several venture capitalists to invest more in the domestic tech sector. Portugal has offered citizenship to tech workers. Nikola has to match their competitor’s employee compensation rates and offer incentives to its workers to ensure that they continue to work at their company.

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Political

1. Consensus among governments to phase out ICE vehicles: ICE (Internal Combustion Engine) vehicles, also known as fossil fuel vehicles are one of the biggest contributors of greenhouse gas emissions. This is why several national and state governments around the world are banning them and setting time frames for the phasing out these vehicles. The ACT regulation passed in California requires manufacturers to sell zero-emission trucks as a major part of their sales from 2024 to 2035. In the Netherlands, 50% of all new public buses have to be zero-emission by 2025. Other European countries like Denmark, Iceland, Ireland and Sweden have pledged to end the sale of new ICE vehicles in less than 10 years. Spain has drafted a law that will allow only the sale of zero-emission vehicles from 2040. These commitments will help countries reach their zero emission targets and will also help the renewable energy sector gather momentum and expand even further. The new Biden administration in the US took significant steps to limit climate change by rejoining the Paris Agreement and promising to replace the US government’s existing vehicle fleet with zero-emission vehicles. These changes are set to benefit fully zero-emission based vehicle manufacturers like Nikola Corp.

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Economic

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Social

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Technological

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Legal

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Environmental

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