Shares in Nikola Corporation, the maker of electric vehicles, sunk more than 10%, after the company decided to recall its battery-electric big rigs due to safety concerns.
The Arizona-based company, which is backed by the founder of Tesla, Elon Musk, announced that it is recalling its battery-electric big rigs over safety concerns. Nikola said in a statement that it is recalling its AEB Class 8 truck, a hydrogen fuel cell Class 8 truck, and its Nikola One and Nikola Two battery-electric Class 8 trucks.
The recall was sparked after the California Air Resources Board (CARB), an agency that monitors air pollution in the state, determined that a vehicle in its test facility had an issue with its braking system. The agency noted that the brakes may not activate properly in some situations, which could lead to a crash.
The recall will affect around 3,000 vehicles in the U.S. and Canada, including the already-shipped Nikola Tre battery-electric big-rig. Production of the Tre will be halted and deliveries suspended until the issue is addressed.
The news of the recall sent shares of Nikola tumbling more than 10%, the biggest drop in more than a month. It was also a blow for investors who have been hoping for the stock to rally and continue to climb after its successful listing on the Nasdaq in June.
The company has taken steps to reassure investors by noting that the recall is a common occurrence and that safety is its top priority. The company also stated that it is working with CARB to resolve the issue.
It is unclear how the recall will affect Nikola, but the situation raises questions about the company’s ability to deliver on its ambitious goals of becoming a major player in the EV market.
For now, investors will have to wait and see how the recall plays out, and if the company can keep up its momentum in the EV market.
