GM joins forces with Nikola in building electric trucks

General Motors Co (GM) will join forces with electric truck startup Nikola Corp in a multibillion-dollar deal to build electric pickup trucks and fuel cell commercial trucks and take on Tesla Inc.

As part of the deal, GM gets an 11 percent stake in Nikola, valued at about $2 billion.

GM will get to nominate a director to Nikola's board and receive up to $700 million from Nikola for assembling the Badger.

GM will also receive EV credits, which is important for GM as many of its vehicles are gasoline-powered.

In return, GM will supply Nikola with a chassis architecture, fuel cell systems, batteries, and a factory to build the proposed Nikola Badger pickup.

It will also supply fuel cell technology for Nikola’s planned Class 7 and 8 commercial trucks.

Nikola gets to save $4 billion in battery and powertrain costs over 10 years and over $1 billion in engineering and validation costs.

According to Nikola CEO Trevor Milton, it's a big deal that they can avoid spending for a pickup truck assembly plant and developing a truck chassis.

Nikola’s Badger will share major components and supply chain with GM’s GMC Hummer electric truck.

The deal, which will run for four years after the start of production and is exclusive except for the European market, lifted shares in both companies on Tuesday.

Shares of Nikola soared over 35 percent to $48.73 after GM’s investment.

GM expects to realize $4 billion in value from the deal, including $700 million for building the Badger at one of its factories, and the value of regulatory credits for a zero-emission vehicle.

Shares of GM rose 6.1 percent in early trading after being stuck for months at levels below $33 a share.