When Nikola started trading on the Nasdaq in June, the U.S.-based clean transportation company raced quickly to a valuation of almost $30 billion.
Its market worth has since fallen to a more reasonable $10.5 billion, but that's still pretty good for a business yet to generate any revenue. Its most promising products are its heavy trucks, powered by electric batteries or hydrogen fuel cells.
The rise of Nikola (whose name, cheekily, is another evocation of electrical engineer Nikola Tesla) will have reinforced a view among European auto industry executives that the U.S. stock market operates by different rules.
While Tesla is only modestly profitable, it's valued at about $275 billion, more than Europe's five largest automakers combined.
At least Europe has a stake in the latest heavily hyped project. Founded by Trevor Milton, a 38-year-old American college dropout, Nikola is relying heavily on expertise from the old continent.
Robert Bosch has helped develop the U.S. company's electric powertrain, and the first Nikola trucks will be built in a German factory belonging to Italy's Iveco, a truck maker backed by the billionaire Agnelli family.
Bosch and Iveco each own more than 6 percent of Nikola. CNH Industrial, Iveco's parent, just recorded a $1.5 billion fair value gain on that investment.
The biggest question is whether a startup dependent on so much external help should have a valuation like Tesla, which builds much of its technology itself. And if Europe has this expertise, why hasn't it produced its own rival to Elon Musk's automaker?
Maybe it's a lack of bravado. Nikola's name is not the only reason it's often compared with Tesla. Milton's hyperactive Twitter presence makes Musk look tame by comparison. Both men's ambitions extend beyond selling zero-emissions vehicles to producing and storing clean energy.
While Nikola is focused on heavy-duty trucks, it has touted a variety of consumer products including a pickup called the Badger. These are catnip for retail investors, as the excitement over Musk's Cybertruck demonstrates.
While Tesla and Nikola are both working on electric heavy trucks, they differ in at least two important respects. The first is hydrogen: Musk is dismissive, while Milton thinks hydrogen is the perfect fuel for long truck journeys. The second is their attitude toward building stuff in-house.
True, in its early days Tesla worked with Lotus to help make the Roadster, and Daimler helped develop the Model S upper premium sedan. Tesla partners with Panasonic to produce battery cells. But Musk is famous for trying to build his own technology, from electric powertrains and automated-driving software to car seats.
Nikola developed its own software, infotainment and battery management-system, as well as vehicle aerodynamics, according to Cowen analyst Jeffrey Osborne.
The company has outsourced or used hired help to do much of the other stuff. More than 200 Bosch employees were involved in building important parts of Nikola's trucks, including the electric motor for the axle, the vehicle-control unit, the battery and the hydrogen fuel cell. The result is a mix of intellectual property owned either separately or jointly by Nikola and its suppliers.
There's no doubt, however, who has the deeper expertise. So far Nikola has been awarded 11 U.S. patents, about 1 percent of the total Bosch is awarded in a typical year. "Bosch gets paid to help us get to industry standards on products," Milton told me.
Getting partners to provide the technological building blocks has some advantages. Nikola has only 300 employees and yet its first trucks should start rolling off the production line soon. Working with partners cuts the risk of the manufacturing delays and quality problems that plagued Tesla.
It's an efficient use of capital too. Nikola's research and development expenses were just $68 million last year. Tesla spent $1.3 billion. After going public, Nikola has about $900 million of cash, although that will not go far in the automotive business.
For the North American market, Nikola plans to handle its own manufacturing, with technical assistance from Iveco. Nikola broke ground this week on a $600 million factory in Arizona.
