GM pulls planned backing from electric vehicle company

General Motors (GM) announced on Monday that it would not be buying into the electric vehicle company Nikola and it would be ending development of an electric and hydrogen powered vehicle.

The two companies in September signed an agreement that would allow Nikola to use GM’s new electric truck underpinnings for its electric and hydrogen-powered pickup called the Badger in exchange for giving GM an 11 percent stake in the company.

In the updated terms for their agreement, this detail was no longer included, essentially ending plans for the project, The Associated Press reports.

Nikola said it would begin refunding customers who had made deposits for the vehicle. Shares for the Phoenix-based company dropped by 24 percent after the announcement.

“In a nutshell, the signing of GM as a partner is a positive but ultimately no ownership/equity stake in Nikola and the billions of R&D potentially now off the table is a major negative blow to the Nikola story,” said Dan Ives, an analyst for investment firm Wedbush. “This went from a game changer deal for Nikola to a good supply partnership but nothing to write home about.”

This news comes as GM has indicated it would be investing more into the electric vehicle industry, moving away from fossil fuels. The company last week shared that it was withdrawing from litigation challenging California’s new, stricter emissions standards, citing the new incoming administration under President-elect Joe Biden and its own plans to invest more in electric vehicles.

Early in November, GM announced that it had reached a breakthrough in battery technology, claiming its new electric batteries would soon rival the performance of diesel-fueled cars. The company claimed that not only would their cars hold twice as much energy, they would also be cheaper than the standard $30,000 that most electric cars are currently priced.

The company reportedly wants to surpass Tesla as the leading global electric vehicle manufacturer.

“We think the industry is transforming, and so we want to be at the leading edge of this,” said GM executive vice president Doug Parks.