Trevor Milton, the founder of US electric truck company Nikola, has stepped down from his position as executive chairman of the company’s board, effective immediately, following allegations of fraud.

Leadership Transition

In light of the allegations against Milton and the ongoing scrutiny faced by the company, Stephen Girsky, a former vice-chairman of General Motors and a current member of Nikola’s board, has been appointed as the new chairman.

In a statement addressing his resignation, Milton expressed his dedication to Nikola’s mission but emphasized that the focus should be on the company itself rather than on him personally. He described the decision to step down as executive chairman as difficult but necessary.

Allegations of Fraud

The announcement of Milton’s resignation comes in the wake of accusations made by the short-selling firm Hindenburg Research, which accused Nikola of deceptive practices regarding its products and business dealings with other companies. Hindenburg labeled Nikola’s operations as an “intricate fraud.”

Among the allegations raised by Hindenburg was the claim that Milton overstated the value of a deal with truck company Swift Transportation in an email to potential investors. The firm alleged discrepancies between Milton’s claims and the actual value of the deal, as evidenced by a purported copy of the contract.

Regulatory Inquiries and Response

Both the Department of Justice and the Securities and Exchange Commission have reportedly initiated inquiries into the allegations against Nikola. In response, the company denounced Hindenburg’s report, characterizing it as an attempt to mislead investors and manipulate the market.

Milton denounced the report as a “hit job,” while Nikola’s shares experienced a significant decline in value following its publication. The news of Milton’s departure further impacted the company’s stock, with shares falling by 22% in US pre-market trading.

General Motors’ Response

Despite the controversy surrounding Nikola, General Motors, which recently entered into a $2 billion partnership with the company to produce its hydrogen fuel cell electric pickup truck, expressed its continued support. GM’s CEO Mary Barra reaffirmed the company’s confidence in Nikola, emphasizing the thorough due diligence conducted before finalizing the partnership.

A spokesperson for GM reiterated the company’s commitment to working with Nikola to finalize the transaction announced earlier, underscoring the collaborative efforts between the two entities.