Nikola Buys Battery Supplier Romeo Power to Secure Supply

Electric truck firm Nikola has made effective the acquisition of Romeo Power, the supplier of batteries for electric vehicles, after signing the ownership of 100% of its shares for an individual price of $ 0.74 per share. In total, this transaction has been carried out for a total economic amount of 144 million dollars by the North American company in order to guarantee the control and supply of these components for the coming years.

The collaboration agreement between the two companies has been underway for several years. Romeo Power has numerous patents for new technologies, something that is of high interest to Nikola mainly due to the need that this company has to obtain vehicles with high energy storage capacities, as well as important figures in terms of their autonomy.

The purpose of this decision by Nikola has come after studying the possibilities that would derive from this movement. The main reason is the vertical integration of the entire production process, which will mean a significant improvement in operational control, as well as a significant reduction in the cost per battery and the materials of which they are composed.

On the aforementioned cost savings, from Nikola they expect to reduce the price of battery packs between 30 and 40% by the end of next year 2023. This, in turn, will result in savings of up to $350 million by 2026, when production of electric trucks is expected to be fully established.

With this acquisition of 100% of the company specialized in the development and manufacture of batteries, Nikola expects a significant acceleration in the development of specific products for the company, with a substantial increase in the specifications of these components, with a greater electric autonomy, as well as improvements in the recharge rate, something that results in a better experience for the end customer.

This transaction is expected to be completed by the end of next October. Once this has been completely done, Romeo Power will be merged with the Nikola company itself. In addition, the battery specialist’s current headquarters in Cypress, California, will become Nikola’s Battery Center of Excellence. However, until this deal is completed (within two months) Nikola will provide Romeo Power with a total of $35 million of additional liquidity in the event that completion of the transaction is delayed for reasons beyond the control of both corporations.