After years of decline, the heavy-duty electric vehicle (EV) maker Nikola (NASDAQ: NKLA) found itself on a major rollercoaster ride in mid-February 2025.
First, on Tuesday, February 18, NKLA stock rallied more than 40% within a single session as it became known that one of Japan’s biggest brokerage firms – Nomura Holdings (TYO: 8604) – raised its stake in the company during the fourth quarter (Q4) to 9.3%.
The rally, however, was not to last and Nikola shares plunged 46.94% in the final hours of the Wednesday, February 19, pre-market.
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Why NKLA stock is plummeting
The massive selloff can be entirely traced to the EV maker’s announcement that it is filing for Chapter 11 bankruptcy protection. The company revealed it has plans to continue limited operations but is primarily seeking to sell its assets.
Over the years, the company that once promised to revolutionize the sector and positioned itself as a major Tesla (NASDAQ: TSLA) rival and competitor with its very name faced numerous issues, lawsuits, and other headwinds.
Indeed, perhaps the biggest roadblock to Nikola’s recovery was the firm’s admission that it faked a video showcasing a working prototype of an electric truck in 2016.
Despite the partially unique struggles, however, the EV maker’s CEO, Steve Girsky, explained that his company struggled and was ultimately brought down by the same factors that have been affecting the entire industry:
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate. Unfortunately, our very best efforts have not been enough to overcome these significant challenges”
Though Nikola has been in a relatively unique position thanks to the early scandal discrediting it for most investors, Grisky is correct in pointing out that the entire sector is facing a crisis.
The EV industry crisis
Through most of 2024, the EV industry has been struggling amidst lacking demand, with Rivian (NASDAQ: RIVN) dropping approximately 30% in the 12 months and Lucid Motors (NASDAQ: LCID) about 20%.
Even Tesla Motors, once the biggest company in the sector, spent much of the previous year as one of the worst-performing stocks of the benchmark S&P 500 index and, in early 2025, appears poised for continued struggles despite a multi-month rally after Donald Trump’s re-election.
Finally, the situation might only grow worse in 2025 as the new U.S. administration has ended the previous EV mandate – designed to incentivize the transition to electric vehicles – and is in the early stages of a trade war that could disrupt numerous industries.
Featured image via Shutterstock
