Nikola buys battery supplier Romeo Power to guarantee supply

The electric truck firm Nikola has made the acquisition of Romeo Power effective, the supplier of batteries for electric vehicles, after signing the ownership of 100% of its shares for an individual price of $0.74 per share. In total, this transaction has been carried out by a total economic amount of 144 million dollars by the North American company in order to guarantee the control and supply of these components for the coming years.

The collaboration agreement between both companies has been underway for several years. Romeo Power holds numerous patents for new technologiessomething that is of great interest to Nikola mainly due to the need that this company has to obtain vehicles with high energy storage capacities, as well as important figures regarding their autonomy.

The purpose of this decision by Nikola has come after studying the possibilities that this movement would derive. The main reason is the vertical integration of the entire production processwhich will mean a significant improvement in operational control, as well as a significant reduction in the cost per battery and the materials they are made of.

Regarding the aforementioned cost savings, from Nikola they hope to reduce the price of battery packs between 30 and 40% by the end of next year 2023. This, in turn, will result in savings of up to $350 million by 2026, when electric truck production is expected to be fully established.

This acquisition will accelerate the development of new batteries for Nikola

With this acquisition of 100% of the company specialized in the development and manufacture of batteries, Nikola expects a significant acceleration in the development of specific products for the companywith a substantial increase in the specifications of these components, with greater electric autonomy, as well as improvements in the recharge rate, something that results in a better experience for the end customer.

This transaction is expected to be completed by the end of next October. Once this is fully done, Romeo Power will be merged with the Nikola company itself. On the other hand, the headquarters currently owned by the battery specialist in Cypress, California, will become the Nikola Battery Center of Excellence. However, until this deal is completed (two months from now) Nikola will provide Romeo Power with a total of $35 million of additional liquidity should the completion of the transaction be delayed for reasons beyond the control of both corporations.

Currently, Nikola also has a supply contract with LG Energy Solution and Proterra, in addition to the aforementioned Romeo Power. Once this agreement is completed, the electric truck company is expected to terminate the contracts with the other two battery companies, although at the moment these are nothing more than rumors. In any case, in the next two months Nikola will explain all the details of this acquisition in a more concise way.

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