Last week, automaker General Motors Co took an 11% stake in Nikola and said the two companies will join forces to build electric pickup trucks and fuel cell commercial trucks to take on Tesla Inc.
Shares of Nikola Corp sank 7% on Tuesday after the short-selling Hindenburg Research, which has alleged the electric truck maker misled investors over its technology, said the company had failed to address most of its queries.
Bloomberg News, meanwhile, reported late on Monday that the U.S. Securities and Exchange Commission (SEC) was probing Nikola to assess the merits of Hindenburg's claims that it had misled investors about its business prospects. The short seller called Nikola an "intricate fraud" that, among other things, overstated the capabilities of its earliest test trucks.
"Nikola welcomes the SEC's involvement in this matter", the company added in the statement. Following each of the points that Nikola denies or explains, the company placed this statement: "These allegations by the short seller are false and misleading, and created to manipulate the market to profit from a manufactured decline in Nikola's stock price".
The SEC did not immediately respond to Reuters request for comment.
Hindenburg Founder Nathan Anderson said in a statement that he's "encouraged that regulators are examining the situation".
Hindenburg had also alleged that a seemingly functional truck, Nikola One, was "simply filmed rolling down a big hill" in 2017.
At the time, a Nikola spokesperson said the report was "filled with misinformation" created to benefit Hindenburg's short bet, while Milton called it a "hit job" while promising a more detailed response to the allegations.