Hydrogen-powered freight truck maker Nikola has filed for Chapter 11 bankruptcy and is set to auction its assets.

This development follows a series of difficulties for the electric vehicle (EV) maker, including weak demand and financial strains.

The company, known for its HYLA brand, is now seeking court approval to sell its assets and continue limited operations.

Nikola said it has entered the bankruptcy proceedings with approximately $47m in cash, which will fund its ongoing activities and the sale process.

The company aims to maintain certain non-dealer service and support for its trucks and HYLA fuelling operations until March.

However, beyond this point, it will require partners to continue these services, the company said.

The decision to file for bankruptcy and sell assets comes after Nikola conducted a thorough review of all possible alternatives to sustain its business.

The firm concluded that a structured sale process would best preserve the value of its assets.

Nikola president and CEO Steve Girsky said: “Our customers have accumulated approximately 3.3 million fleet miles across both our FCEV and BEV truck platforms and our HYLA fuelling network has dispensed well over 330 metric tons of hydrogen.

“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate. In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet and preserve cash to sustain our operations.

“Unfortunately, our very best efforts have not been enough to overcome these significant challenges, and the Board has determined that Chapter 11 represents the best possible path forward under the circumstances for the Company and its stakeholders.”

Nikola's legal counsel includes Pillsbury Winthrop Shaw Pittman and Potter Anderson & Corroon, with Houlihan Lokey Capital as its investment banker and M3 Partners as its financial advisor.

The proposed sale process, pending court approval, would enable potential buyers to place binding offers for Nikola's assets, which would be sold free of the company's debts and certain liabilities.

The process is designed to attract both strategic and financial buyers.

In October, Nikola reported sales of 88 hydrogen-powered Class 8 electric trucks in the third quarter.

For the first three quarters of 2024, the total number of hydrogen fuel cell trucks wholesaled by Nikola reached 200, with 235 units sold since the truck’s market launch in the last quarter of the previous year.