Nikola shares plunged more than 20% on the news.
In the wake of the allegations, GM reminded investors that it had not yet closed the deal with Nikola. The new arrangement, announced Monday morning, is still just a memorandum of understanding, not a final deal. Under this deal, GM will simply be a supplier to Nikola.
Nikola executives have said the Badger pickup would be built only through an arrangement with an outside company. The company has now said it will refund deposits potential customers had placed for the truck.
“Nikola is focusing on its core business of producing commercial zero-emission trucks,” a Nikola spokeswoman said in an email.
The two companies will also discuss Nikola possibly using GM’s Ultium battery system, which will used in GM’s future electric vehicles.
“This went from a game changer deal for Nikola to a good supply partnership but nothing to write home about,” analysts Daniel Ives and Strecker Backe at Wedbush Securities wrote.