A Nikola prototype of the electric vehicle (EV) startup’s planned Badger pickup was made partly of components from a Ford F-150 Raptor, the jury in the criminal fraud trial of Nikola founder Trevor Milton was told.
The testimony came before prosecutors showed the jurors texts from 2020 between Nikola employees worried about the promises Milton was making for the Badger.
The boss “doesn’t let facts or details get in the way of a good story,” one said, while another simply called him “an idiot.”
Engineers working on the heavily hyped Badger in 2020 merged parts from the gasoline-powered Raptor with a “chopped up” electric Nikola power sports vehicle, also in early development, former Nikola employee Brendan Babiarz told the jurors Thursday in federal court in Manhattan.
Babiarz, who led design and created renderings for the Badger, said it was done to meet a deadline Milton had imposed for unveiling the pickup.
‘Oh No’
“It took me a little by surprise,” Babiarz testified, referring to a tweet by Milton indicating that the company was going to start taking orders.
“We were still developing, obviously, the trucks, and the timing was not adding up, so we did not have a definitive date.”
Prosecutors questioned Babiarz about text messages he exchanged with other Nikola employees expressing concern about the content of Milton’s tweets and public statements throughout 2020.
In one chain, sent the same day as Milton’s June 7, 2020, tweet announcing that the company was going to start taking reservations for the Badger that month, Babiarz forwarded the tweet to Michael Erickson, the Badger project’s lead, saying, “Oh no.”
‘His Next Fix’
“I told Trevor on Thursday we are at least 6-8 weeks from any tooling starting,” Babiarz told Erickson in the exchange prosecutors presented to the jury.
“I know,” Erickson responded. “Haha Trevor doesn’t let facts or details get in the way of a good story.”
“Yeah I guess I was hoping the going public part would make him more methodical and careful but guess not ha,” Babiarz said, referring to the company’s listing of shares in June 2020.
“Ha me too,” Erickson wrote back. “Guess he’s over it already and needs his next fix.”
Milton faces securities and wire fraud charges, accused of hoodwinking investors by portraying inoperable products as fully functional and lying about the company’s technology and partnerships.
He faces a maximum prison term of 25 years if convicted of the most serious charge.
The defense has called the case “a prosecution by distortion,” arguing Milton was just following the company’s marketing plan and never said anything he didn’t believe to be true.
Milton’s lawyers this week were granted a request to do a remote inspection of the Badger to help bolster their case, over Nikola’s objections.
The Badger, which never made it to production, drove a lot of the fanfare around Nikola in 2020 as the company went public through a reverse merger with a special purpose acquisition company, or SPAC, a corporate shell used to buy another company.
It was part of an ill-fated September 2020 deal with General Motors, in which the Detroit automaker would manufacture the Badger and also take a $2 billion (R35 billion) stake in Nikola.
‘Nikola World’
Nikola started taking $5,000 (R88,000) reservations for the Badger in June 2020, even though it had no prototype or manufacturing plan for the pickup at that point.
Nikola had planned to unveil the fuel-cell-powered pickup at an event in December of that year billed as “Nikola World.” The conference was postponed that September, just nine days after Milton stepped down from his role as executive chairman following a short-seller’s report that alleged he had misled investors.
Babiarz said he was surprised when Milton tweeted that reservations for the Badger would be accepted starting on June 29.
Ultimately the vehicle was scrapped that November, after GM significantly scaled back its involvement with Nikola, also abandoning plans to take a stake in the startup and sharply narrowing its relationship with Nikola.
At one point Babiarz texted Erickson about Milton’s comments that the company was going to route the excess water produced by the Badger’s hydrogen system into a drinking fountain inside the truck. Babiarz told the court he had never heard of such a plan.
“What did Trevor say about this ridiculous water fountain?” Babiarz wrote. “Does he want to add an espresso machine too.”
“I’d like that,” Erickson said, adding an emoji of a coffee cup.
Under questioning by Milton lawyer Torrey Young, Babiarz acknowledged that some of the employees he exchanged texts with were friends of his.
“That’s not you drafting official company policy?” Young asked.
“No,” Babiarz said.
“You were blowing off some steam, right?” Young asked.
“Yes,” Babiarz said. “Just texts between co-workers.”
Huge Seller
Milton had previously bragged that the Badger would one day outsell Ford’s F-150, the market-leading pickup. The F-Series has been America’s best-selling vehicle for four decades.
In good years, Ford sells close to 900,000 of the trucks, generating more than $40 billion (R705 billion) in annual revenue.
If the F-Series were a company, it would bring in more money than Coca-Cola, McDonald’s, Nike, or Starbucks.
The Raptor is a lucrative and high-powered variant sold to truck enthusiasts with deep pockets and a taste for going off the beaten path.
Babiarz was the third witness to testify in the trial, which started on Tuesday with opening statements.
The case is US v. Milton, 21-cr-478, US District Court, Southern District of New York (Manhattan).
Keyword: The dark side of electric car startups