Electric vehicle maker Nikola announced on Wednesday that the company filed for Chapter 11 bankruptcy and will pursue the sale of all its assets, citing monetary issues and a struggling and competitive market.

A maker of commercial semi-trucks, Nikola is just the latest EV maker to file for bankruptcy joining Fisker, Proterra and Lordstown Motors for doing so recently, due to a challenging market marred by low demand in the U.S. and Europe. China has also made it harder for EV companies to remain afloat in the U.S. due to the country's companies' more affordable EVs.

"Like other companies in the electric vehicle industry, we have faced various market and macroeconomic factors that have impacted our ability to operate," Steve Girsky, president and CEO of Nikola, said in a news release. "In recent months, we have taken numerous actions to raise capital, reduce our liabilities, clean up our balance sheet and preserve cash to sustain our operations. Unfortunately, our very best efforts have not been enough to overcome these significant challenges."

Even Tesla and its CEO Elon Musk reported an initial drop in annual sales in 2024 as borrowing costs, multiple recalls and a stagnant selection of EV vehicles hurt demand.

Here is what to know about Nikola and the EV company's looming bankruptcy.

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What's next for Nikola?

When Nikola voluntarily filed for bankruptcy, the company also filed motions with the court to "ensure its limited operations are able to continue," including meeting its obligations to employees during the sale process, according to the Phoenix, Arizona-headquartered EV maker. Additionally, the company said it will provide support operations for trucks in the field and some hydrogen-fueling operations through the end of March.

As Nikola enters Chapter 11, the company said it has about $47 million in cash to fund remaining operations, go through the sale process and exit bankruptcy.

Nikola, which originally made battery-powered semi-trucks before pivoting to electric trucks that use hydrogen, said it decided to initiate a structured sale process due to it representing "the best possible solution to maximize the value of its assets."

Nikola's stock fell below $1 multiple times since 2020

Nikola increased production of its hydrogen-powered trucks in 2024, but this effort only resulted in the company losing hundreds of thousands of dollars on every vehicle sold as fleet operators remained reluctant to invest in an EV truck while borrowing costs rose, Reuters reported.

Nikola stock fell about 46% by Wednesday midday to about 45 cents, valuing the company at less than $40 million. This drop comes after the EV maker's peak market capitalization of about $27 billion in 2020, when it was valued more than Ford Motor Co., according to Reuters.

Since going public in 2020 through a merger with a blank-check company, Nikola's stock had fallen below the $1 mark on several occasions, prompting the company to execute a reverse stock split last year to comply with Nasdaq's listing rules. A stock split occurs when a company's board of directors decides to increase the company's number of outstanding shares by giving more shares to current shareholders. 

Nikola's founder and former CEO sentenced on fraud charges

Nikola's leadership has come under question, particularly after its founder and then-CEO Trevor Milton was convicted of fraud in 2022 and sentenced to four years in prison the following year. Milton was the subject of a federal probe that was sparked by an investment fund that claimed Nikola misled the public about the company's progress, including the capability of its hydrogen semi-trucks and battery systems.

Milton resigned from Nikola amid the federal investigation, saying in a statement: "Nikola is truly in my blood and always will be, and the focus should be on the Company and its world-changing mission, not me. So I made the difficult decision to approach the Board and volunteer to step aside as Executive Chairman."

Hindenburg Research, an investment research firm, accused Nikola of committing "intricate fraud" and claimed Milton was making false statements about the company. In response, Nikola said the firm's claims were "designed to provide a false impression to investors and to negatively manipulate the market in order to financially benefit short sellers, including Hindenburg itself."

Reuters contributed to this story.