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Ben Foldy: From the Wall Street Journal, This is Bad Bets. I’m Ben Foldy. We opened this series talking about Trevor Milton’s federal fraud trial. That trial has now reached a verdict.

Speaker 2: Trevor Milton was found guilty.

Ben Foldy: Trevor Milton has been found guilty of making false and misleading statements regarding Nikola’s business. His sentencing is scheduled for January.

Speaker 3: Milton now facing a sentence of more than 20 years in prison.

Ben Foldy: I was in the courtroom when the verdict was read. Trevor seemed shocked and stayed with his family for a long time after the jury filed out. Outside the courthouse, he told reporters, “I did nothing wrong.” He and his lawyers have pledged to keep fighting. In a statement, Nikola said the company was pleased to close this chapter and focus on executing its business strategy.
We’ll get back to the trial in a later episode, but this episode is all about how Trevor got here. It’s about everything that had to change in the world to put him in a position to both raise so much money and eventually get in so much trouble for how he raised it. A lot of things had to happen. One of the first factors started shifting in 2011 far away from Utah. President Obama in his State of the Union speech that year made clean energy a national priority.

President Obama: We’re showing a challenge. We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields and focus on the hardest problems in clean energy, we’ll fund the Apollo projects of our time.

Ben Foldy: He said it would be like this generation’s moonshot and zero emission vehicles powered by batteries and hydrogen would be a big part of it.

President Obama: With more research and incentives, we can break our dependence on oil with biofuels and become the first country to have a million electric vehicles on the road by 2050.

Ben Foldy: The U.S. government had loaned billions of dollars to companies like Ford and Nissan and also a Silicon Valley startup called Tesla, found by a brash ambitious CEO, Elon Musk. Soon, Tesla’s revolutionary Model S would show that there was a growing market for electric cars and an opportunity for companies that could supply that demand.
But cars represented only one part of the opportunity for electric vehicles. There are more than 2 million semi trucks on the road every day in the United States. Proportionally, these trucks pollute far more than cars do. That is where Trevor Milton says he saw his opportunity. Before I go on the reporting behind what you’re about to hear, we sent to Trevor Milton’s PR rep and lawyers and asked for Trevor’s side. They didn’t answer our questions, but Trevor did plenty of talking publicly about his vision over the years. Here he is describing the opportunity he saw on a podcast called the Jimmy Rack Show.

Trevor Milton: I realize that the trucking world was the dirtiest world out there and it was an industry that was incredibly ugly and I knew I had a chance. The money is really in taking something that’s ugly and taking it and turning it sexy.

Ben Foldy: Trevor had been trying to break into the trucking industry for years, like his efforts with dHybrid Inc, the natural gas engine technology company. In our first episode, we told you about Trevor’s idea for a locomotive semi, meaning a truck with electric motors that could haul freight while running cleaner than those powered by diesel. In the early 2010s, it was almost like Trevor’s big idea had become a matter of national import. His electric semi truck idea could meet investors’ growing appetite for climate conscious investments, but there still wasn’t anyone who’d cracked the code on taking semi trucks electric.
It’s worth taking a second to explain why this is such a big challenge, why the lithium ion batteries that power cars like Teslas can’t just be slapped on a semi. The key thing to understand is that batteries are very, very heavy. It’s not a huge issue for cars which can be built with lightweight materials to mitigate the weight and sleek silhouettes that reduce air resistance, allowing them to still travel a meaningful distance for most drivers. But having enough energy to haul 60,000 pounds any meaningful distance, that requires several tons of batteries and that cuts into the weight you can haul and also means longer recharge times. A trucker who is driving cross country would have to make hours of stops every few hundred miles just to recharge. Trevor said a childhood revelation he had a Union Pacific rail yard sparked an idea for a solution.

Trevor Milton: This all started when I was a kid. My dad inspired me with trains. He was the manager of Union Pacific Railroad in Las Vegas. I grew up around trains. I grew up on the rail yards.

Ben Foldy: He said he was riding in the cab of a locomotive when he had a conversation that would shape his life.

Trevor Milton: The conductor, which is the guy who drives the train would say one day they’ll be smart enough to build a locomotive semi truck. I was six years old around that age. That’s when the light bulb went off.

Ben Foldy: The idea was that you could have a truck powered by electric motors and batteries, but rather than needing to stop and recharge, the batteries on the truck could be recharged while it’s in motion. They could do this by running kind of a mini power plant on board, almost like a locomotive.
In the last episode, we told you about Trevor Milton’s attempts at a new trucking technology and how the sale of one of those companies for $12 million help seed is next enterprise. This next company, he would go on to call Nikola, taking the first name of the electrical engineering pioneer Nikola Tesla, whose last name was already taken, and it would be this company Nikola, that would attempt to develop the electric semi truck that Trevor had envisioned as a kid. Now he just needed someone to build it.

Bob Simpson: Hi, I’m Bob Simpson. I’m an electrical engineer from Portland, Oregon where I design electric drive systems that go into electric vehicles, whether it’s cars, trucks, motorcycles, or really anything that moves under battery power.

Ben Foldy: Bob is an engineer who spent a lot of his free time rigging up electric cars at a home workshop that he built. By 2010, Bob had become a mainstay in the small world of electric vehicle enthusiasts after taking a black BMW 3 Series and turning it into an electric car with a 50-mile range. He’d go to EV meetups where the crowd wasn’t all too different from the one Trevor ran with back in Utah, a lot of budding entrepreneurs who love toys.
The difference was that these toys, the electric toys that Bob was interested in, there was a sense among some of the people working on them that they might someday help save the world from the ravages of climate change and the auto industry was beginning to take seriously the possibility of an electric future. By the early 2010s, electric vehicles seemed like they might become the next big thing and were drawing in legacy car makers, startups, and garage tinkerers. As EVs inched closer to the mainstream, Bob took his garage tinkering and he turned it into a new business called EVDrive. As that business started to grow, he brought on an apprentice, an up and coming engineer named Paul Lackey.

Paul Lackey: When I started working at EVDrive, it was really two guys in a garage. We were located in Bob’s garage out in Banks, Oregon, and a lot of the people who had been hobbyists were trying to start making businesses out of it. It was really kind of a wild west community at the time.

Ben Foldy: After Bob’s BMW, EVDrive’s next big project in the wild west of electric vehicles was an impressive little off-road number, an electric UTV. It was this UTV that they said brought Trevor Milton into their lives. If you don’t know what a UTV is, imagine a kind of off-road golf cart with a roll cage. It usually seats four people and is used primarily for backcountry expeditions. The unique thing about this UTV, the thing that set it apart is that EVDrive had put a powerful electric motor on each wheel. Here’s Paul.

Paul Lackey: This machine had a lot more power, so they’re able to completely outrun the gas powered version of it, and that’s something that people hadn’t really seen at the time.

Ben Foldy: This UTV, it was really impressive, and it was also a perfect and encapsulation of one of the reasons why electric vehicles looked like they might finally hit the mainstream. It’s not just that they’re better for the environment or that they can save you money on gas. They can actually accelerate a lot faster than conventional cars, which means that they can be more fun to drive. It’s part of why Tesla’s caught on. To use Trevor’s word from earlier, electric vehicles were starting to be sexy.

Paul Lackey: Even if it’s a fairly powerful gas car, it always feels like it’s really trying hard to move. You don’t get any of that with EVs. It’s just you put the pedal down and it’s just moving you so smoothly and quickly. There’s really no feeling like it other than a roller coaster.

Ben Foldy: Paul and Bob’s spunky little UTV, it actually reminds me of a story we heard in episode one about Trevor taking a spin on a go-kart that his friend rigged up with nitrous back in St. George. In early 2015, Bob got an email from Trevor reaching out about a potential partnership, a partnership to tackle a really big idea. Bob says Trevor wanted to take EVDrive’s technology and supersize it, put it on a semi truck. Right off the bat, Bob says he was really impressed by Trevor’s big idea.

Bob Simpson: He just knew that he was onto something big that was going to change the industry. I thought, all right, this is it. This is the breakthrough the industry needs with electric. It was a brilliant design.

Ben Foldy: In March 2015, Bob and Paul met Trevor in person for the first time. Trevor flew out to Oregon to check out EVDrive. When Bob and Paul picked him up from the airport, they say Trevor jumped right into pitching them on his ideas. Here’s Paul.

Paul Lackey: He immediately started talking and really didn’t stop talking, mostly talking about himself and about his dreams and what we were going to do with him and so forth. He started telling us his backstory. He told the story about when he was a little kid and the train driver told him that someday someone would make a semi truck that worked like a train and how that had been his dream his whole life and so forth.

Ben Foldy: According to Bob and Paul, the way Trevor told it, they were going to play a starring role in a transportation revolution. For EVDrive, I mean this was really a potential for a big breakthrough.

Paul Lackey: Absolutely. Trevor’s big thing was he would always say, “I’m working with the best people in the world and this project’s going to be done by the best people in the world and maybe I’m going to bring you on.” And so, obviously, the unspoken statement there is you guys are the best in the world, which we weren’t, but it’s a nice thing to feel.

Ben Foldy: Bob and Paul say Trevor was offering them the chance to join what he said was an elite team tackling a really big idea. If it worked, if they could build the truck that Trevor envisioned, the engineers from Oregon say they were told that they might see a big payday.

Paul Lackey: He mentioned that after we worked with them, they would buy us out. And so, he was really planting dreams in our head for sure.

Ben Foldy: Paul says he remembers something else from meeting Trevor for the first time, something that he says shocked him. Trevor said Nikola planned to build a hybrid electric truck with a natural gas turbine. It wouldn’t be zero emission, but it would be a lot cleaner than diesel. At some point on Trevor’s visit to Oregon, Paul remembers when his partner Bob asked, “What if we took it one step further? What if we tried to make a fully electric, zero emission truck rather than a hybrid?”

Paul Lackey: He was just doing thought experiments of what if we tried to do this just with a battery so it didn’t have the emissions from the range extender. Trevor, he said, “I don’t give a shit about the environment. I just want to make money.” That quote has stuck with me ever since just because it was so audacious and so vulgar and so unexpected.

Ben Foldy: Years later, when he would be called to testify as a witness in Trevor’s federal fraud trial, Paul recalled this anecdote for the jury. In court, Trevor’s lawyers questioned whether this kind of conversation would’ve shocked Paul pointing to examples where Paul himself used explicit language online. But Paul testified he wasn’t just taken aback by the language, but by the sentiment. Paul told us that he became an engineer in part to fight climate change. Paul says that for a moment, it felt strange teaming up with someone whose motivation seemingly were so different, but Trevor’s idea still represented a really big opportunity to move the needle on cleaner transportation, so the engineers from Oregon decided to team up with him to help him build this unique truck. Right away though, Paul says that working with Trevor, it was proving difficult.

Paul Lackey: As we started working on this, Trevor got a little bit more scary, I would say. He would get very hostile if we were missing a deadline or something. And so, we were a little bit intimidated of him as time went on.

Ben Foldy: But for the most part, the engineers from Oregon say they were able to look past this kind of thing. The work was its own reward. To them, the truck Trevor envisioned had a real shot at being a very, very impressive piece of engineering and a proof of concept that could kickstart the electrification of heavy transportation. Bob and Paul say that they were shipping the components they made in their Oregon shop to Nikola in Salt Lake City through the end of 2015. But they say when they visited Nikola’s HQ in Salt Lake City in early 2016, the truck wasn’t anywhere near done. At that point, Paul says what they saw was mostly a bunch of unassembled parts scattered around a warehouse.

Paul Lackey: The stuff that we had shipped them was sitting in the corner of this empty warehouse on the same pallets we had shipped them on. It was pretty obvious that there was no truck imminent.

Ben Foldy: In May 2016, Nikola decided it was time to come out of stealth mode. That’s what startup founders call it when they keep their company secret. Nikola put out a flurry of press releases to tell the world what the company had in store.
One simply announced that Nikola was going to transform the transportation industry. Another announced the hybrid electric truck Bob and Paul had been working on, christened the Nikola One and said that the company was taking reservations for it. The following month, another release claimed that the Nikola One had already generated over $2 billion in pre-orders and said that the company would unveil its new truck at a public event in December, just six months away. Then in August, Nikola made its two most ambitious announcements yet. First, the company put out a press release that said that Nikola One had achieved zero emissions, which to Bob and Paul just raised more questions.

Paul Lackey: That was really surprising and we spent some time speculating on how he was going to make this zero emissions.

Ben Foldy: Just a few weeks later in another press release, Nikola provided the answer. The Nikola One would be powered by a hydrogen fuel cell. The hydrogen fuel cell is a big deal in clean energy circles. The technology is an old one. It’s been around since the 1830s. It uses a chemical reaction to combine hydrogen, the most abundant element in the universe, with oxygen, the most abundant element on earth. In the process, it creates electricity, heat, and water. Remember, Trevor’s original idea was to build an electric truck with a natural gas turbine. It would be cleaner than a diesel, but it wouldn’t be emission-free. But if the truck used a fuel cell instead, the only byproduct would be water. I asked Paul.
Just to make clear, there’s a big difference between a hydrogen fuel cell and a nat gas turbine, which is itself a pretty complex system?

Paul Lackey: Yeah. Those are completely different technologies. Both of them are hard, but they’re hard in different ways. The idea that they would get hydrogen working anytime soon was ridiculous. It’s like, “How is he going to do hydrogen? Where did he come up with that idea?” I asked some of the engineers, “What’s the plan for hydrogen?” They were like, “We have no idea. We have no hydrogen anything that we’re working on.”

Ben Foldy: With the truck’s debut just three months out, Bob and Paul say that a sense of anticipation and mystery among some of the engineers they spoke with was mounting ahead of the public unveiling.

Bob Simpson: At that point, we were all just in the dark, just holding our breath.

Ben Foldy: Again, Bob.

Bob Simpson: What was going to happen come December 1st? What was he going to say? Because I knew he had people scheduled up, hundreds of people coming in and staying in hotels and it was going to be a big event.

Ben Foldy: The engineers from Oregon say they started working full time in Utah for eight weeks leading up to the reveal. A few days before the big show, Bob and Paul say that a sleek white cab was put on the truck, but they also say that the shiny new cab was masking the fact that underneath, not only were the truck’s metal housings for gears and motors totally empty, it also didn’t have a fuel cell in it or anything else relating to hydrogen. They say they watched as Nikola-

Paul Lackey: Brought in an artist who stenciled H2 for hydrogen on the truck, even though there was no hydrogen technology, not only in this truck, but not under development either.

Ben Foldy: They say the truck, as it was, couldn’t possibly drive. In fact, Bob and Paul told me the truck needed to be plugged into an extension cord for the headlights to turn on, but from the audience, it would look exactly like the truck of the future Trevor said it was. Paul says he was so ready to get out of there to get back to his family and distance himself from Trevor that he didn’t even stick around for the unveiling. Bob on the other hand, Bob says he was too intrigued to leave and that he’d volunteered to be the guy who crawled onto the stage to plug in the truck.

Bob Simpson: I was very, very curious. And so, I stayed on purpose for the event. I mean, I didn’t have to, but I wanted to be there and I wanted to be on stage and see the whole thing splash out formally.

Ben Foldy: December 1, 2016, the day the Nikola One would be shown to the world and the kickoff of a two-day presentation about the truck. You can still watch videos of the entire event online. This event would be a hotly contested part of Trevor’s fraud trial. Clips from these videos would be presented as evidence in that trial by both sides. In the video of the main event, the truck’s unveiling on the first night, you can see that the Nikola headquarters in Salt Lake City looks like it’s hosting a Silicon Valley style product reveal. A rotating stage is flanked by massive screens. There’s elaborate stage light. When Trevor Milton’s introduced, the room goes completely dark except for a set of spotlights that light his path as he trots up onto the stage. He’s wearing a tight blue button down with the sleeves rolled up. He’s got a big smile on his face.

Trevor Milton: Wow. A good crowd out here tonight. Thank you. I appreciate it. This is a really incredible time. One of my-

Ben Foldy: Trevor’s standing in front of the Nikola One. It’s on stage covered by a giant white sheet. He tells the audience that the truck they’re about to see, it’s going to change the world.

Trevor Milton: One of the tasks in life that we have as entrepreneurs is to be able to take risks that no one else thought was possible, that no one ever thought that they could ever do. The consequences would be too great, but we took it and we achieved. It’s a really incredible story of our time.

Ben Foldy: He goes on to talk about Nikola’s innovative technology, the hydrogen fuel cell that he says is in the truck, how it’s so much better than diesel.

Trevor Milton: The fuel cell we have in the truck is 70% efficient. Imagine a diesel engine, you’re much, much lower, a turbine, you’re much, much lower. You’re up to 70% efficient with a fuel cell.

Ben Foldy: He tries giving details about the fuel cell.

Trevor Milton: Our fuel cell is a PEM.

Ben Foldy: But Trevor seems to forget on stage what the acronym stands for, a proton exchange membrane, which creates a strange moment where Trevor just ad-libs.

Trevor Milton: Our fuel cell is a PEM. Paul, echo, mango, whatever, I don’t know the terminology. I’ll let you guys figure that out. PEM, fuel cell. On board, there’s 23-

Ben Foldy: Trevor talks for over 20 minutes and then it’s time for the big moment. Time to show the Nikola One to the world. Music builds, and as the strings crescendo, the white sheet covering the truck is pulled off.

Trevor Milton: Oh, that thing is so awesome. Oh, we’ve been waiting so long to show this to the world. You have no idea. It’s hard to even contain my emotion about this.

Ben Foldy: The truck sitting on the center of the stage, the truck that’s making Trevor emotional, it looks like it’s from some sci-fi movie about the truckers of tomorrow. The cab’s gleaming white curves with dark angular windows make it look like a Stormtrooper’s helmet from Star Wars. On its side, the words H2, zero emission, hydrogen electric are written in a clean, bold font.

Trevor Milton: Hydrogen’s the most, it’s really the only few out there doesn’t create any emissions or byproducts, incredible. The only byproduct’s water. As this truck goes down the road, the only thing coming out of this truck will be drips of water.

Ben Foldy: As he’s extolling the truck’s benefits, Trevor tells the audience he does have one worry.

Trevor Milton: We will have a chain on the seats to prevent people from coming in just for the safety. I don’t want someone to end up doing something and driving this truck off the stage. It’s a little expensive. You could probably buy a jet with what it costs to build this thing. We’re going to try to keep people from driving off, but this thing fully functions and works, which is really incredible.

Ben Foldy: Trevor invites the then governor of Utah, Gary Herbert up on stage to share in the moment.

Trevor Milton: I want to bring up the governor of Utah who is here tonight. If you can come up, Gary, I appreciate it.

Ben Foldy: On stage, standing next to the governor, Trevor closes with a promise.

Trevor Milton: I wanted to thank everyone for coming out to this event. It means more to me than anything, and this truck will come to market, I can promise you that. For every doubter out there that said that there’s no way this is true, how can that be possible? We’ve done it.

Ben Foldy: Bob Simpson, who is standing off to the side of the stage says he was looking on in disbelief.

Bob Simpson: He’s telling everybody something that this truck is not. There was nothing hydrogen about this truck. This is a lie that you can’t hide. There’s too many people that know about it.

Trevor Milton: It’s my pleasure to actually let you guys enjoy the night, see the truck, know it’s real. Touch it. Feel how sturdy it is. You’re going to see that this is a real truck. This is not a pusher. Thank you so much everyone. I appreciate it. Thank you. Come here, buddy.

Ben Foldy: Watching the replay of the event online, I can almost feel the enthusiasm in that room. It radiates off the screen. People are taking photos, several get out of their chairs to applaud, a standing ovation for a semi truck. It seems like a moment of triumph for Trevor. The defense at his trial said that because the company was years away from being publicly traded, the events surrounding the reveal were irrelevant to whether or not Trevor committed securities fraud. But a jury decided that this was the scene of a crime, and that Trevor’s language about the truck being drivable constituted part of his fraud. A few days after the event, Bob was back in Oregon with Paul and Paul says they were just waiting for Trevor to tell him to get back to work and what the next steps would be.

Paul Lackey: What I expected was an email the next day saying, “All right, everybody back to Salt Lake City and let’s get this thing running before people figure out that it doesn’t work.”

Ben Foldy: That email, they say it never came, and they had their own business to keep afloat. The engineers from Oregon eventually went back to work designing components for other electric vehicle projects. They say they tried their best to move on from Nikola. For Trevor though, the success of the Nikola One debut was something to build on. It was a smash hit. On the Jimmy Rex Show Podcast the following year, he said it was-

Trevor Milton: Probably the most successful private launch of a product in American history.

Ben Foldy: He would soon say that within just a few months of the unveiling, Nikola was racking up billions of dollars in pre-orders for the Nikola One.

Trevor Milton: I got the opportunity to be able to build a company that is turned into this worldwide phenomenon. Within just a couple months of launching our truck and a few months following thereafter, we’ve racked up over $6.5 billion in pre-orders for our truck.

Ben Foldy: An internal review by Nikola would later say these orders were non-binding and that orders for several hundred trucks were from companies whose existence could not be confirmed. Nikola was nonetheless asking for incentives to build a factory to fulfill all those pre-orders. I called someone who says he heard Trevor’s pitch first hand. Can you hear us?

Gary Herbert: I can hear you, yes.

Ben Foldy: Great. Former governor of Utah, Gary Herbert, the same governor who Trevor called on stage at the end of the Nikola One reveal. Governor Herbert told me that around the same time behind the scenes, Trevor was trying to get Utah to give Nikola a large incentive package to build its factory there.

Gary Herbert: We started looking at the details and one of the things that we found out after that was, we’d like to start building these here and set up a manufacturing plant and all we’d ask you to do is give us $100 million up-front.

Ben Foldy: The former deputy head of Utah’s economic development office told us he recalls that Trevor asked for $200 million up-front. He said Trevor asked for other things as well like for the state to order 1,000 trucks and buy a facility for Nikola. The state said no. I’m curious, did that stand out? Was that an ambitious ask?

Gary Herbert: Well, oh, sure. It was all ambitious, but it was really unprecedented. That’s not how we do things in Utah. We have incentive programs. We never do anything up-front.

Ben Foldy: Governor Herbert said a state committee evaluated Nikola’s request and rejected it. When Governor Herbert talked to Trevor about it, he said Trevor then made a harder sale.

Gary Herbert: He said, “Well, we’re going to go to Tennessee instead. They’re ready to take us on and help us where you are not willing to. I’d like to stay in Utah, really want to stay in Utah and it’s my home state, but we’re going to have to go where we can get the incentive.” And so, okay, well good luck to you.

Ben Foldy: A spokesperson for then Tennessee Governor Bill Haslam told us the state’s economic development team met with Nikola but did not pursue the project. But in January 2018, Nikola said it was moving its operations to Arizona, a state that offered the company around $5 million in grants and around $40 million in tax incentives provided Nikola met certain requirements.
At the event to announce the move, Nikola showed a video. In it, the Nikola One, the same white truck that Bob and Paul had worked on was cruising on a desert highway pulling a trailer. Panoramic drone shots and the mountain backdrop give the clip a real sense of speed. The company also posted the footage on Twitter where Bob and Paul saw it and they say that they were completely bewildered.

Paul Lackey: My first thought was, “Did they get that thing working?”

Ben Foldy: Again, Paul.

Paul Lackey: I hadn’t talked to anybody from there for almost a year. And so, I texted my friend and asked, “Hey, did you get this truck up and running?” He said, “No, it hasn’t been touched since the show.”

Ben Foldy: Meanwhile, Trevor’s vision for Nikola kept growing well beyond just semi trucks. Trevor started talking a lot about Nikola’s plan to start making all the hydrogen to fuel those trucks as well.

Trevor Milton: The biggest difference we’ve been able to do is disrupt the whole supply chain. Nikola doesn’t just build the hydrogen electric truck from the ground up, but we also build the hydrogen stations that go with it. It’s the chicken and the egg.

Ben Foldy: The chicken and the egg. This idea was central to Trevor’s vision for the company in the years following the Nikola One reveal. Remember, hydrogen fuel cells have been around since the 1830s and fuel cells have been put in cars experimentally at least since 1960. You could buy a hydrogen car right now, but unless you live in California, you probably wouldn’t have anywhere to fill it up. That’s because no one’s made clean hydrogen fuel at affordable prices in the U.S. or built a network of stations that would be necessary for interstate travel.
Trevor said Nikola planned to do just that. He wanted Nikola to make both the trucks and the fuel. It was as if the company’s business plan was to be the next Ford Motor and the next ExxonMobil. As Trevor cast his vision for Nikola’s future, other companies started wanting to get in on it. Nikola developed partnerships with some huge names in global manufacturing, companies like Bosch.

Trevor Milton: We got Robert Bosch to put $130 million into our company. How did I do that? I proved the fuel cell could work and I turned around and I said, “Hey, I’ve got this thing. I will allow you guys to manufacture it for the whole world if you build it for us and save me $1 billion.” They said, “Done. Let’s do it.”

Ben Foldy: We reached out to Bosch, which told us it wouldn’t comment about Trevor Milton. It did say it “invested in early funding rounds for Nikola because it believes in the possibilities of hydrogen technology.” It also told us that it’s continuing to develop fuel cell technologies and supporting global customers, including Nikola. With partners like Bosch, Nikola was getting access to the kind of engineering firepower and cash that would help it develop prototypes of new trucks, prototypes that could actually drive.
I think this is one of the most crucial parts of the story to understand. I remember later, when Nikola was getting called out by skeptics for allegedly overhyping its technology, people were asking if Nikola was like Theranos, the company whose founder was later convicted of misleading investors over its blood testing technology. But what happened here is far more interesting than that, because unlike Theranos, Nikola in this moment didn’t require some big technological breakthrough. The technology already existed even if it wasn’t practical yet. Though according to Bob and Paul, while the Nikola One might not have been everything Trevor claimed it was, there is actually a world in which everything Trevor envisioned for Nikola could become reality.
Through 2019, the company raised hundreds of millions of dollars and continued making big deals with big companies gaining access to technology and manufacturing partners. By the end of 2019, Nikola still hadn’t made a truck for production yet, but Trevor said the company was well on its way, that the first trucks would be on the road soon. To reach the kind of scale that Trevor planned for Nikola though, plans that involved building hundreds of hydrogen stations in addition to thousands of trucks, the company would need a lot more money. In early 2020, Nikola announced the company’s biggest move yet. The company was about to go public and it would do so during one of the wildest stock market environments in history.

Speaker 9: Many of the top stocks on Robinhood have seen triple digit returns in the past month.

Speaker 10: The blank-check bonanza or SPACapalooza.

Speaker 11: What do you guys think? Nikola Motors, are they the next Tesla?

Ben Foldy: That’s after the break. In March 2020 while the US was starting to shut down from the spread of a new coronavirus, Trevor and Nikola were staying active. Nikola had just announced that it would go public in the next few months. Trevor was interviewed on CNBC, live on the floor of the New York Stock Exchange to talk about it.

David Faber: Very happy to be sitting down now with the founder and CEO of Nikola, Nikola. I’m still trying to work on it guys, but I’m going to get it right.

Ben Foldy: With the pandemic looming. The floor of the exchange behind Trevor in the video is bereft of its usual hustle and bustle. There are three people behind the news desk. Here’s the interviewer, David Faber, one of CNBC’s biggest names. There’s Trevor in his characteristic Nikola polo shirt. And a third man, a member of Nikola’s board of directors, a suave looking guy in a suit and tie, longish gray hair pushed behind his ears.

David Faber: Trevor Milton and Jeff Ubben, of course, a man you’ve seen occasionally on CNBC though not in some time, Chairman of ValueAct.

Ben Foldy: Jeff Ubben is a notable name in the finance world. He’s famous for being an activist investor, which means he and his firm ValueAct would buy large stakes in companies and push to implement his ideas on how they should be run. ValueAct had just made a sizable investment in Nikola with Jeff taking a seat on Nikola’s board. We reached out to Jeff Ubben for comment and we didn’t get a response. Activist investors like Jeff can sometimes be at odds with company’s executives, but at Nikola, Jeff says he was aligned with Trevor’s vision. In that CNBC interview, Jeff says he used his influence on Nikola’s board to help convince Trevor that now was the right time to go public. He says that with enough capital, Nikola has the chance to grow into one of the most valuable companies in the world.

Jeff Ubben: I mean, this is $100 billion dollar company.

David Faber: $100 billion company.

Jeff Ubben: $100 billion company because it’s solving the biggest problem, which is decarbonizing transport fuel.

Ben Foldy: And if it’ll go public, Nikola said its value was a little over $3 billion at this point, and Jeff Ubben was making the case on national television that it might grow into a $100 billion company and he’s betting that going public now is the route that just might get it there. But the way Trevor and Nikola decided to go public might have been a key reason for his conviction. The normal process to go public, listing your company to an IPO, it’s a cumbersome one. It can take years to prepare with lots of legal review and back and forth with the SEC. Trevor Milton and Jeff Ubben say that they chose a quicker way because there was a hot new trending capital market. SPACs.

Speaker 14: SPACs have burst into the mainstream this year.

Speaker 15: Everybody needs to have a SPAC.

Speaker 16: SPAC, SPAC, SPAC, SPAC, SPAC.

Ben Foldy: As you might guess, SPAC is an abbreviation. It stands for a special purpose acquisition company. It’s kind of a go public quick alternative to an IPO. A SPAC is essentially a publicly traded shell company with a pile of cash. It’s listed on a stock exchange but doesn’t have an actual operating business. For this reason, they’re often called blank-check companies. Here’s how they work. SPACs go public and raise money from investors by promising to buy a private company with that cash. The private company gets new funding and a public listing with less scrutiny than a traditional IPO. Investors in the SPAC hope the combined company is a big hit. But here’s the key difference. A SPAC deal is a merger, not an IPO, which means the private company doesn’t have to go through the entire slog of the traditional IPO process. This is part of Trevor’s pitch in the interview on CNBC.

Trevor Milton: We needed a method to get to the market to get publicly traded quickly and that’s really what the SPAC was there for. It helped us get to market in less than six months, saved us a bunch of time.

Ben Foldy: In other words, one of the main reasons Trevor says Nikola is choosing to go public through a SPAC is speed and the kind of money that public markets provide could help fund Trevor’s vision for Nikola’s future.

David Faber: What was the key advance here that you feel you’ve made? I would assume it has to do with the fuel cells themselves.

Trevor Milton: No, it’s actually the chicken and the egg. It’s very similar to Amazon. The reason why Amazon’s been so successful around the world is that they cover not just the goods sold online. I mean, anyone can do that, but it’s the entire logistics behind it, the vertical integration. It’s very similar to what Nikola’s done. What we’ve done is we don’t just sell a truck, we’re really a tech energy company is what we are. We actually sell all the energy for the truck to the consumer at the same time.

Ben Foldy: Got that? Again, Trevor’s saying Nikola isn’t just a truck company, it’s an energy technology company building an entire ecosystem around the future of transportation. That’s the vision Trevor’s pitching to investors. Trevor says that the money the company is planning to raise will help Nikola grow into a manufacturing juggernaut.

Trevor Milton: The crazy thing is we’ll be the largest energy consumer in the world in seven years.

Ben Foldy: The largest energy consumer in the world in seven years. It’s a remarkable claim and forecasts like that, you don’t typically hear them in a traditional IPO process because there are actually other differences beyond just speed that separates SPACs from IPOs. I called a professor at the University of Washington who spent a lot of time studying the SPAC boom to help explain.

Beth Blankespoor: I’m Beth Blankespoor and my main research agenda is anything dealing with how companies communicate with their investors.

Ben Foldy: Beth says that in a traditional IPO, companies go dark for weeks before their shares begin trading. No executive interviews, no big press releases, it’s called a quiet period. But Beth says that a lot of companies that went public through SPACs in 2020, they did things a little differently.

Beth Blankespoor: There are a lot of rules around IPOs because it’s a new company coming out to the market and no one really knows about it. With SPACs, the word on the street was you can say more things. There is less risk that you’ll get in trouble because it’s technically not an IPO. It’s more like a merger and we say things in mergers, it’s fine.

Ben Foldy: The SPAC IPO distinction is a legal gray area. But in 2020, around the time Nikola went the SPAC route, some folks on Wall Street were arguing that SPAC deals offered certain protections that IPOs didn’t, protections around things like forecasting future results.

Beth Blankespoor: You have these firms making really optimistic claims and some of them, like Nikola, they’re talking during the whole process, where most IPOs, they’re not allowed to say things.

Ben Foldy: And that, Beth says, led to a situation in the summer of 2020 where some executives striking SPAC deals were making big claims about their company’s futures right as the public was hearing about them for the first time. This stuff, she says, it just doesn’t happen with IPOs.

Beth Blankespoor: You have this playground where they’re told they can say all sorts of future projections and they’re safe from lawsuits. Then, they start looking around and they see that all these other SPACs are saying they’re going to be fantastic. Now suddenly, you have this competition where everyone’s trying to say, “I’m going to be the best. You should invest in me.”

Ben Foldy: My reporting shows that Trevor had a history of giving investors rosy projections about the future. When I watched that interview with Trevor Milton and Jeff Ubben on CNBC, I’m reminded of some of Trevor’s early investors back in St. George who said Trevor told them that they’d double their money. I’m reminded of dHybrid’s projections, which said the company would go from no revenue to hundreds of millions in profits in just a few years.
By 2020, it was Nikola telling investors to expect pretty amazing growth. If the company achieved what it was forecasting, it would be the fastest company ever to go from no annual revenue to $10 billion in annual revenue, beating current record holder Google. Beth thinks there’s another reason why companies who do SPAC mergers might choose to make these kinds of ambitious projections, retail investors, meaning individual investors who use brokerage accounts like Fidelity or Robinhood, trading on their phones and laptops, looking for the next Google.

Beth Blankespoor: A lot of retail investing is looking for that one outlier, and then all the companies, they have incentives to say, “I’m going to be that one great company, you should invest in me.”

Ben Foldy: By the summer of 2020, individual investors had become a market moving force. I talked to my colleague, Gunjan Banerji, a lead writer for our markets coverage at the journal to talk about how that happened and what it meant. Gunjan has done a lot of reporting on the retail trading boom over the past couple of years. She told me that the reason behind it was actually pretty simple. It was really easy to make money in the stock market in the spring of 2020.

Gunjan Banerji: You had the COVID-19 pandemic, and all of a sudden, the economy was shut down. We were all sitting at home on our computers or on our phones spending so much time staring at these screens. There was no sports. There was no sports betting, so this became national entertainment to trade stocks. It was so fun at the time because everything was going up and it seems like everyone around you is finding success in the stock market, so why not try to double or triple or quadruple your money? It just seems so easy to get stupid rich.

Ben Foldy: Gunjan told me there were a lot of stocks you could have invested in around March 2020 that would’ve given you solid returns if the market bounced back. She echoed what Beth, the accounting professor, said, that many of these retail traders weren’t just looking for solid returns, they were looking for massive returns.

Gunjan Banerji: A lot of investors were looking for hyper growth stocks. They were looking for companies that promised insane amounts of growth in the future. What is the next Tesla? What’s the next Amazon?

Ben Foldy: Do you remember the first time you heard the name Nikola or in what context?

Gunjan Banerji: I think the first time I heard the word Nikola was probably when I was talking to individual investors in 2020. One stock a lot of people were focused on was Tesla, but a lot of individual investors, they had missed out on Tesla. I think the first time I heard about Nikola was someone saying to me, “This is going to be the next Tesla.”

Ben Foldy: In that interview on CNBC in March, Trevor underlined the parallels he saw between the two companies.

Trevor Milton: Tesla, by the way, has done an incredible job. They’ve gathered the whole world to follow behind them and that’s what Nikola has done around the trucking world. We have the same type of following of people that just love us. It really is a retail play.

Ben Foldy: We reached out to Tesla for comment and we didn’t get a response. In the run up to Nikola’s Trading debut, some YouTube stock influencers were already asking whether Nikola really might be the next Tesla, and Trevor Milton, the Elon Musk of the 18-wheeler.

Speaker 19: Tesla is the future. But wait, have we found the next Tesla?

Speaker 20: Is investing in the Nikola Motor’s IPO in 2020 similar to investing in the Tesla IPO in 2010?

Ben Foldy: On June 4, 2020, Nikola went public. Trevor thanked his supporters on a live broadcast.

Trevor Milton: This is where our opportunity today is to celebrate with all of you and of our employees, all of our fans and our believers, everyone who wants to actually change the world.

Ben Foldy: As a part of this announcement, Trevor’s face was actually projected on a screen in Times Square to count down to the closing bell.

Trevor Milton: I want to thank all the governments and all the investors that have made this possible. It’s now my opportunity and my pleasure to count down to the ringing of the bell for the NASDAQ with Nikola Motor Company.

Ben Foldy: After Nikola’s share started trading, Trevor took to Twitter to tell of Nikola’s coming success. Some of these Tweets would also be a hotly contested issue at Trevor’s trial. One of the things he Tweeted about in the days following Nikola’s debut on the stock market was a zero emission pickup truck that Nikola said it was working on called the Badger. A truck, Trevor said, was designed to dethrone the top selling vehicle in America, the Ford F-150.
A Nikola investor in those early days was buying shares in a company that its founder said would make semi trucks, hydrogen, fueling stations and pickups, the most popular style of vehicle in the U.S. The excitement around the company reached a fever pitch and Nikola’s stock reaped higher after Trevor Tweeted on June 7th that reservations for the Badger would be going live soon.

Speaker 21: Nikola Motors is on absolute fire today.

Speaker 22: (foreign language).

Speaker 11: If you guys aren’t entertained yet, well, make sure you stay tuned because we’re going to talk more about this insane supernova move today here on NKLA.

Ben Foldy: By June 9th, Nikola had a valuation around $30 billion. Its shares have been trading for four days. At the trial, the defense’s only witness was Allen Ferrell, who teaches securities law at Harvard Law School. Ferrell testified that changes in Nikola’s stock price could be explained by factors including market forces, company announcements and random volatility, but not retail investors relying on Tweets. Two retail investors testified at the trial that they did rely on Trevor’s statements.

Speaker 23: It is the new hot electric vehicle stock Nikola roaring higher. It is now up 96% since it’s June 4th debut. One point last week, it had a market cap bigger than that of Ford Motor.

Ben Foldy: Again, Trevor took to Twitter, “I’ve wanted to say this my whole adult life, Nikola is now worth more than Ford and FCA, nipping on the heels of GM. It may go up and down and that’s life, but I’ll do my part to be the most accessible and direct executive on Twitter. Others will follow.”
This is when Nikola really caught my eye as a reporter. I was on the auto’s desk at the time, and when an electric vehicle startup’s market cap balloons pass forwards within a week of going public, it’s the kind of thing that grabs your attention. I was assigned to write my first story about Nikola that day. One of the things I found most striking as I started reporting was the company’s flamboyant, very online founder and how he used social media.

Trevor Milton: The investors around the world right now are tired. They’re tired of like an executive sitting in an office behind his chair making millions of dollars and forgetting about the average factory worker or even the consumer. There’s unparalleled contact between myself, the executive chairman, and the founder of Nikola and all of our fans.

Ben Foldy: Over the summer of 2020, on podcasts, on television, on social media, I watched Trevor tell grander and grander stories about himself and the company that he founded.

Trevor Milton: I spent my life trying to build that locomotive semi truck and I did. I was the first person in the world to build a locomotive semi truck.

Ben Foldy: I watched him tell the story of a serial entrepreneur, one whose ideas were sometimes ahead of their time.

Trevor Milton: We met with every truck company in the world and most of them were so arrogant that I could never work with them. They were just complete a-holes and would walk in the room and they’d say, “Why should we work with you?” I would just walk right out the door. I’m like, “If you can’t see why your old dinosaur ass needs to work with me, I have no desire to even be in this room.”

Ben Foldy: But now he said his idea had finally arrived. Success was inevitable.

Trevor Milton: I’m going to build this company, become the most valuable trucking company in the world, one of the most valuable brands in the world, one of the top maybe 5 or 10 greatest growth stories in American history because I know what’s coming.

Ben Foldy: While Trevor was talking up Nikola’s potential, the company’s early success had made him very, very rich. He set a Utah real estate record with the purchase of a $32 million ranch. It’s got eight bedrooms, a helicopter pad, and a wine cellar, which Trevor did a walkthrough of for his followers on Instagram.

Trevor Milton: This is a little wine cellar thing we have. My wife drinks wine. I don’t. All the wine you see is hers, but you can see instead of bottles of wine, there’s like-

Ben Foldy: Trevor also bought a Gulfstream private jet from a fund led by the Nikola board member we mentioned earlier, Jeff Ubben. He paid for it with $6 million worth of Nikola stock. He bought two other planes as well and would post videos about them on social media.

Trevor Milton: I’ll try to do a couple little videos of me flying up there, a lot different than the other plane I usually film with because this guy’s a little guy.

Ben Foldy: I looked in Nikola’s filings and saw that Trevor sold around $94 million worth of stock around the time of the SPAC deal. At the stocks peak in June, Trevor’s remaining shares in Nikola were worth more than $8 billion. It seemed like everything was going swimmingly for Trevor Milton. From the outside, he seemed unstoppable, but that would soon change. On the next episode of Bad Bets, we take you inside the group of people who would band together to bet against Trevor Milton.

Speaker 24: I called him up and he answered, and I said, “Look, I’m a lawyer in Salt Lake City. I’m just investigating this guy, Trevor Milton.”

Speaker 25: I said, “Man, I’ve been waiting for this call for about 10 years.”

Ben Foldy: A team of professional skeptics puts Trevor under a microscope.

Speaker 26: We just went through all the video footage that we could find, all of his interviews, and just systematically went through the claims to try and test them to see if they were real.

Speaker 24: That became the foundation of the short report, A List of Lies.

Ben Foldy: That episode is out next week on October 28th. Bad Bets is a production of the Wall Street Journal. This season is produced with Jigsaw Productions in collaboration with Story Force Entertainment. This episode is hosted by me, Ben Foldy. The series is directed by Sruthi Pinnamaneni. Scott Saloway is the supervising producer. Ken Brown is WSJ’s financial enterprise editor. Shane McKeon, Frank Matt and Garrett Graham are the producers. Editorial consulting by PJ Vote. Fact checking by Elizabeth Moss. Sound design, original composition and mixing by Armen Bazarian. For The Wall Street Journal, Daniel Rosen is the co-executive producer of WSJ Studios. Ben Weltman is the senior executive producer. For Jigsaw Productions, Stacey Offman and Richard Perello are executive producers. For Story Force Entertainment, Blye Pagon Faust and Cori Shepherd Stern are executive producers. Special thanks as well to WSJ’s Charles Farrell, Jamie Heller, Brent Kendall, Christina Rogers, Gunjan Banerji, Jonathan Sanders, Corrine Ramey, James Fanelli, Rick Brooks, Emma Moody, and Jessica Patton. If you’re enjoying the series, please take a moment to subscribe and rate us on your favorite podcast platform. Thanks for listening. See you next week.