Nikola Back in Federal Court in Dispute with CanadaBased Commercial Vehicle Manufacturer Lion Electric

Last year when electric vehicle manufacturer Nikola Corp. acquired Cypress, California-based Romeo Power Inc. a news release from Romeo’s website indicated the acquisition would help Nikola “secure control of critical battery pack engineering and production” and would “yield annual cost savings of up to $350 million by 2026” for Nikola.

The acquisition has now landed Nikola in federal court in Arizona. Canada-based EV manufacturer Lion Electric Co. is claiming that Nikola told Romeo to increase prices on an existing contract with Lion for all but 40 of 296 battery packs Lion ordered for its Lion 8T Class 8 electric truck.

In addition, Nikola is accused of telling Lion customers to buy Nikola Tre Electric trucks because the Lion vehicles would not be available. As a result, Lion had more than 100 unfilled battery orders for the 8T in the last two years.

“As a result, Lion has and will have incurred substantial damages, not including the risk to future orders and of reputational injury,” according to the suit. Another company, Lightning eMotors may also sue Nikola for a similar issue.

During Nikola’s most recent earnings call in February, Chief Financial Officer Kim Brady minimized the Lion and Lightning eMotors claims. Nikola wrote off $4.3 million in Romeo inventory because Romeo will now exclusively supply Nikola. Romeo battery pack production is moving to Nikola’s plant in Coolidge, Arizona, from the existing Romeo facility in Cypress.

“We believe we will be able to work through this,” said Brady. “We don’t believe there will be any long-term consequences there.”

In other Nikola news, the company continues to be under federal scrutiny after it agreed at the end of 2021 to pay the Security Exchange Commission $125 million. The company has since renegotiated the payment schedule after an initial payment of $25 million. Nikola said it would recoup some of that money from original founder Trevor Milton.

Milton was estimated to be worth $3.1 billion at the time the company was slapped with numerous charges by the SEC for fraud.