Nikola slips 25% after striking long-awaited deal with General Motors that doesn't include crucial equity stake

• Nikola slipped 25% on Monday after it announced a long-awaited deal with General Motors.
• They signed a memorandum of understanding that said General Motors would provide Nikola with its Hydrotec fuel-cell system for use in Nikola's commercial semitrucks.
• The deal does not include General Motors taking an equity stake in Nikola or an OEM partnership to build Nikola's Badger pickup truck.
• Visit Business Insider's homepage for more stories.

Nikola Corp. briefly surged and then dipped on Monday after the company said it reached a memorandum of understanding with General Motors to work together on the production of Nikola's commercial semitrucks.

The MOU replaces a previously announced deal that included General Motors taking a $2 billion equity stake in Nikola and the two companies working together to build the Badger pickup truck.

Shares of Nikola briefly surged as much as 25% in Monday premarket trades after the deal was announced, but those gains quickly evaporated after it was revealed that General Motors would no longer take an equity stake in Nikola or help the company build its Badger pickup truck.

Nikola traded down as much as 25%, to $21. The MOU came on the same day that Nikola's lockup period for insiders ended, allowing millions of shares to be sold by certain Nikola insiders.

A press release said that under the terms of the MOU, Nikola will "integrate GM's Hydrotec fuel-cell technology into Nikola's Class 7 and Class 8 zero-emission semi-trucks for the medium- and long-haul trucking sectors."

Read more: GOLDMAN SACHS: Buy these 16 stocks that are underestimated for now, but should crush expectations in 2021-22 on the way to at least 20% upside

Nikola said it expected to begin testing prototypes of its fuel-cell-powered trucks by the end of 2021 and testing beta prototypes in the first half of 2022. The release said the companies would also "discuss the potential" of using General Motors' Ultium battery system in the Class 7 and Class 8 vehicles.

"Heavy trucks remain our core business and we are 100% focused on hitting our development milestones to bring clean hydrogen and battery-electric commercial trucks to market," Nikola CEO Mark Russell said.

While the MOU doesn't encapsulate all the terms of the previously announced deal, it's likely better than nothing after Nikola and its founder, Trevor Milton, were accused in a short report from Hindenburg Research of engaging in fraud and misleading investors.

Following the report's publication in September, Milton voluntarily stepped down as chairman, even as the company dismissed many of Hindenburg's claims.

The release said that Nikola's MOU with General Motors is "subject to negotiation," and that Nikola "will refund all previously submitted order deposits" for its Badger pickup truck.

Read more: Buy these 10 stocks set to soar and smash Wall Street's expectations in the recovery from COVID-19, RBC says