Nikola shares fall after battery fires lead to electric truck recall

Investing.com -- Shares in Nikola (NASDAQ:NKLA) shed just under a sixth of their value in premarket U.S. trading on Monday after the group announced a sweeping recall of 209 of its battery-powered electric trucks following recent fires.

In a statement late on Friday, Nikola said a preliminary outside investigation found that a coolant leak inside a single battery pack was the probable cause for the fires. Multiply trucks were affected by a fire on June 23 at Nikola's Phoenix, Arizona headquarters, while a damaged truck held at the site for monitoring re-ignited last month.

The company had initially suspected foul play may have been involved in the fires, but this scenario and "other external factors" were ruled out after the investigation declared them "unlikely."

Nikola has recalled all of the trucks sent to dealers and customers and is in the process of contacting all of these parties, according to a spokesperson quoted by Reuters. Altogether, the vehicles make up about 60% of the heavy-duty battery electric trucks that Nikola has shipped in the last year.

All sales of its new battery-electric vehicles have been temporarily suspended, Nikola said.

However, the firm noted that these actions will not impact hydrogen-fuel cell electric trucks currently in production, adding that the battery pack of these vehicles has a different design to the battery-powered models. Nikola has been attempting to shift its focus to hydrogen-fuel cell trucks in order to boost flagging demand.

The recall will likely prove to be an early test for Chief Executive Officer Stephen Girsky, who took over from Michael Lohscheller earlier this month. He is Nikola's fourth CEO in four years and third in less than one year.