GM's new partner Nikola accused of 'intricate fraud'

Shares in fledgling US electric vehicle start-up Nikola have slumped after accusations it took part in an "intricate fraud" designed to fool investors.

According to the Financial Times, financial 'short sellers' – that is, investors who bet on, and aim to profit from, a drop in a company’s share price – have amounted what they claim is "extensive evidence" that Nikola had faked a product video that featured the Badger pick-up and that its proprietary technology had actually been purchased from another company.

Questions have also been raised over past businesses run by Nikola's founder, Trevor Milton.

By releasing the report, the short sellers achieved the desired result, with Nikola's share price sinking 15 per cent on Wednesday and a further eight per cent last Thursday.

Milton has dubbed the accusations "lies".

Among the allegations are that the US EV truck company bought electrical inverters from a supplier that it rebranded with tape during a demonstration video, claiming they were made in-house.

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Perhaps more alarming for those who have ploughed millions into the start-up was that Nikola was claimed to have faked a 2018 product video that showed the Nikola One truck driving downhill on a stretch of highway.

According to the report, the truck videoed was rolling under gravity as it had no working engine, or pure-electric powertrain, on board.

The video was then edited to look like the truck was moving itself in an isolated area in Utah on terrain that looked flat.

An insider involved in the film's production, speaking to the FT, reportedly confirmed those allegations.

Just last week, Nikola's share price leapt by almost 40 per cent after the announcement that General Motors would build its Badger pick-up.

As part of the deal, GM will lend Nikola its next-generation Ultium battery technology and Hydrotec fuel-cell knowhow in return for a $US2 billion ($A2.8bn) equity stake – equivalent to an 11 per cent stake in the Arizona-based start-up.

The arrangement with Nikola, GM says, will see the fledgling electric truck-maker remain responsible for sales and marketing, while GM will carry out the final engineering, homologation and validation for sales in global markets.

Despite being embroiled in the scandal, GM is for now staying loyal to Nikola, issuing a statement that read: "We are fully confident in the value we will create by working together. We stand by the statements we made in announcing the relationship."