Nikola Corporation (NKLA): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear, actionable breakdown of the forces shaping Nikola Corporation right now. As a realist, I see a company still navigating a high-stakes transition. The PESTLE (Political, Economic, Sociological, Technological, Legal, Environmental) framework helps us map the near-term risks and opportunities to clear actions.

Here's the quick math: Nikola's success hinges entirely on scaling its hydrogen infrastructure, not just truck sales. If the hydrogen highway doesn't materialize fast, their competitive edge-and the balance sheet-evaporates. That's the core decision-driver.

Political Factors: The Regulatory Headwinds

The regulatory environment is a major swing factor, and frankly, it's gotten tougher in 2025. The biggest hit is the uncertainty around federal support. In October 2025, the US Department of Energy (DOE) cancelled $2.2 billion in funding for two major West Coast hydrogen hubs, with the remaining five hubs also facing potential reductions. This directly jeopardizes the infrastructure Nikola needs to fuel its trucks. Still, the Inflation Reduction Act (IRA) remains a lifeline, offering a Clean Hydrogen Production Tax Credit of up to $3.00 per kilogram of hydrogen produced. That credit is essential to making hydrogen competitive with diesel. The political risk is now execution: Can Nikola build its own production and dispensing network fast enough to overcome the federal funding pullback?

Action: Nikola Management: Aggressively secure private capital partners for the HYLA network, assuming zero further DOE hub funding.

Economic Factors: The Cash-Burn Reality

Nikola is in a race against its own cash burn, and high interest rates make that race harder for everyone. Analysts project Nikola's 2025 revenue to land between $406.5 million and $612.97 million. The company is aiming for a positive cash contribution margin per truck as it transitions into 2025, plus hoping to turn positive on the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) level. But for context, analysts still expected a negative adjusted EBITDA margin of -291% for the full year 2024. That's a huge gap to close. The cost of capital for both Nikola and its fleet customers is inflated, making large-scale fleet purchases more expensive and slowing the adoption curve. The cost of 'green' hydrogen must drop to achieve parity with diesel, which is why the IRA's $3.00/kg credit is so critical.

Action: Investors: Watch the Q4 2025 earnings call for a definitive statement on per-truck cash contribution margin-it's the only number that matters for solvency.

Sociological Factors: Trust and Talent

Growing corporate focus on Environmental, Social, and Governance (ESG) mandates fleet decarbonization, which is a massive tailwind for zero-emission vehicles. But here's the rub: public perception remains sensitive to past corporate governance issues, including the founder's conviction. Trust is a factor that fleet managers consider when signing multi-year, multi-million-dollar contracts. Plus, the industry faces a real shortage of skilled technicians for the maintenance of complex electric and fuel cell powertrains. You can sell the truck, but if fleets can't service it, they won't buy it. This skill gap is a defintely near-term bottleneck for scaling adoption.

Action: Sales/HR: Create a certified technician training program with a major US vocational college; market the program to fleet customers as a value-add.

Technological Factors: The Infrastructure Hurdle

Nikola's core technological challenge isn't the truck; it's the fueling network. The company is aiming for up to 60 hydrogen stations by 2026, a necessary step to support its Fuel Cell Electric Vehicle (FCEV) strategy. But building out this network remains a massive technical and logistical hurdle. Meanwhile, rapid advancements in battery energy density continue to challenge hydrogen's range advantage, especially for shorter-haul routes. Nikola must ensure its proprietary software and vehicle integration-the 'digital twin' of the truck-are best-in-class to win fleet contracts against rivals like Tesla Semi, which plans to start mass-producing in 2025.

Action: Engineering: Publish a transparent white paper detailing the 2025-end fuel cell durability and stack life improvements, focusing on total cost of ownership (TCO) metrics.

Legal Factors: The Policy Whiplash

Ongoing litigation and regulatory scrutiny from past business practices still pose a financial and reputational risk. Critically, the mandatory demand driver for Nikola's trucks just got weaker. In 2025, California agreed to formally repeal key components of its Advanced Clean Fleets (ACF) rule for High-Priority and Drayage fleets. This rule, which was set to mandate the phase-in of zero-emission vehicles, is being rolled back due to legal challenges and a lack of EPA waiver. This policy whiplash means Nikola can no longer rely on state mandates to drive a large portion of its sales; it now must compete purely on TCO and performance.

Action: Legal/Policy: Re-evaluate the 2025-2026 sales forecast, removing the mandatory volume previously expected from California's High-Priority and Drayage fleets.

Environmental Factors: The Green Hydrogen Imperative

For Nikola's FCEVs to justify their environmental premium, the hydrogen production must be truly 'green' (from renewables), not 'blue' (from natural gas with carbon capture), which is projected to account for roughly 90 percent of US hydrogen production by 2030. The energy efficiency of the 'well-to-wheel' hydrogen pathway is under constant scrutiny, and any perceived reliance on non-green sources will erode the ESG advantage. Also, the disposal and recycling of large-format lithium-ion battery packs from its Battery Electric Vehicle (BEV) line require new, scalable processes. Zero-emission vehicle mandates, even with the ACF repeal, are still accelerating the retirement of diesel fleets, creating a fundamental market opportunity.

Action: Investor Relations: Clearly delineate the percentage of hydrogen sourced from certified 'green' (electrolysis/renewable) versus 'blue' (natural gas/CCS) pathways in the next quarterly report.

Nikola Corporation (NKLA) - PESTLE Analysis: Political factors

You're running a capital-intensive business, so the political landscape isn't just a backdrop; it's a direct line item on your pro forma. As of late 2025, the political environment is defined by a rapid, volatile shift in federal policy, which creates both massive subsidy-driven opportunities and near-term regulatory chaos. The key takeaway is this: the hydrogen economy's federal support is now less a stable tailwind and more a politically contested variable.

Federal tax credits (e.g., Inflation Reduction Act) drive hydrogen/EV adoption.

The Inflation Reduction Act (IRA) was the original game-changer, providing a clear financial incentive for both the production of hydrogen and the build-out of the refueling network. For Nikola Corporation's fuel cell electric trucks, the most critical incentive is the Section 45V Clean Hydrogen Production Tax Credit, which offers up to $3.00 per kilogram of clean hydrogen produced (for the lowest-emissions tier, under 0.45 kg CO2e/kg H2). This credit is a powerful tool to close the cost gap between hydrogen and diesel fuel.

On the infrastructure side, the Section 30C Alternative Fuel Refueling Property Credit is vital for Nikola Corporation's energy strategy. This credit offsets station construction costs by up to $100,000 per dispensing equipment item, which directly supports the company's plan to build a network of hydrogen stations. However, this federal support is now under pressure. The 'One Big Beautiful Bill Act' (OBBBA), signed in July 2025, has introduced early phase-outs and new restrictions on certain clean energy tax credits, creating significant uncertainty for projects that haven't already broken ground.

US Department of Energy funding for hydrogen hubs is crucial for infrastructure build-out.

The stability of the hydrogen supply chain-the very thing that makes Nikola Corporation's FCEV trucks viable-has been severely compromised by a major federal policy reversal in late 2025. The US Department of Energy (DOE) had initially committed $7 billion to seven regional Hydrogen Hubs (H2Hubs) to accelerate infrastructure development.

In October 2025, the new administration terminated over $7.5 billion in clean energy grants, including $2.2 billion for the two largest West Coast hydrogen hubs: the $1.2 billion Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES) in California and the $1 billion Pacific Northwest Hydrogen Association hub. This is a huge setback. ARCHES, a key regional partner, announced a hiatus on its hub activities in early November 2025 as a direct result of the funding cancellation. This political risk translates directly into a higher cost of capital and significant delays for Nikola Corporation's hydrogen station deployment plans.

Geopolitical tensions affect critical battery and fuel cell component supply chains.

Geopolitical tensions, particularly with China, are now formalizing into regulatory hurdles that directly impact the cost and availability of critical materials for both battery-electric and fuel cell components. China dominates the midstream and downstream processing of many critical minerals, holding an average market share of 70% across 19 of 20 strategically important minerals.

For Nikola Corporation's battery-electric vehicles, this includes minerals like lithium, cobalt, graphite, and nickel, with China refining 65% of the global lithium supply and 74% of the global cobalt supply in recent years. For the hydrogen fuel cells, the key risk is the Platinum Group Metals (PGMs) used as catalysts:

• Platinum: South Africa produces over 70% of the world's platinum, but China controls about 80% of the global refining capacity. This dual concentration is a single point of failure.
• Iridium: Used in PEM electrolyzers for green hydrogen production, iridium supply is volatile and constrained as it is a by-product of platinum and nickel mining.

The new 'Foreign Entity of Concern' (FEOC) restrictions in the OBBBA, which generally apply to tax years beginning after July 4, 2025, aim to limit the use of Chinese-sourced materials in projects claiming US tax credits, forcing a costly and complex supply chain diversification.

State-level mandates, like California's Advanced Clean Fleets rule, create mandatory demand.

State-level mandates, especially in California, have historically been the most reliable driver of demand for zero-emission trucks. California's Advanced Clean Fleets (ACF) rule was intended to be a massive, mandatory demand-side mechanism for companies like Nikola Corporation.

However, the most lucrative part of this mandate has been repealed due to legal and federal challenges. In 2025, the California Air Resources Board (CARB) agreed to repeal the requirements for High-Priority Fleets and Drayage Fleets-the largest commercial segments-with the formal proposal expected by October 31, 2025. This policy reversal removes a major source of mandatory sales volume and significantly increases the risk to Nikola Corporation's near-term sales forecasts.

The only remaining mandatory element of the ACF rule is for State and Local Government Fleets. These fleets must still ensure that 50% of their vehicle purchases are zero-emission starting from January 1, 2024, increasing to 100% by 2027. This segment is a defintely smaller, but stable, source of demand that Nikola Corporation can target.

Here's the quick math on the policy shift:

Finance: Re-evaluate the cost of hydrogen supply and station deployment based on the Hydrogen Hub funding termination and the new FEOC rules by the end of the year.

Nikola Corporation (NKLA) - PESTLE Analysis: Economic factors

The economic landscape for Nikola Corporation (NKLA) in the 2025 fiscal year is defined by a high-interest-rate environment that pressures capital expenditure, coupled with volatile raw material costs that strain already negative manufacturing margins. Simply put, the cost of money and the cost of materials are the two biggest economic headwinds.

High interest rates increase capital costs for both Nikola and fleet customers buying trucks.

You need to look closely at the cost of capital right now. The Federal Reserve's actions have kept the federal funds rate elevated, sitting at a range of 3.75-4 percent as of October 2025. This benchmark directly impacts Nikola's own borrowing costs for factory expansion and hydrogen infrastructure development, which is a capital-intensive effort. For your customers-the fleet operators-this translates into higher commercial vehicle financing rates.

Here's the quick math on truck financing: The average auto loan interest rate for new cars was 6.80 percent in the second quarter of 2025. For commercial loans, especially for a new technology like a hydrogen fuel cell electric vehicle (FCEV), rates can be higher, making the Total Cost of Ownership (TCO) a harder sell against cheaper, established diesel trucks. Analysts project new car loan rates could ease slightly to an average of 7.0 percent by the end of 2025, but that is still a significant hurdle for large fleet purchases. Higher interest rates mean fewer trucks sold, or at least a longer sales cycle. This is defintely a headwind.

Volatility in lithium and nickel prices impacts battery electric truck production costs.

The supply chain for battery electric vehicles (BEVs) remains a source of cost instability, despite Nikola's shift toward FCEVs. While Nikola aims to sell its remaining on-hand BEV inventory for revenue in 2025, the underlying commodity market is still highly volatile. Demand for both lithium and nickel is expected to rise through 2025, leading to continued pricing volatility.

Nickel, a key component in many high-energy-density batteries, has seen prices generally subdued, hovering around $15,000-$16,000 per ton in the fourth quarter of 2025, largely due to a supply surplus from Indonesia. However, the lithium market is more erratic. After a substantial decline, analysts anticipate stabilization in 2025, but price spikes are still a risk. For example, the price of 99.5% battery-grade lithium carbonate surged to USD 9,276.48/mt on January 15, 2025. These swings make long-term cost forecasting for battery packs difficult.

The cost of 'green' hydrogen production must drop to achieve parity with diesel.

Nikola's core strategy hinges on the viability of its hydrogen ecosystem, HYLA, but the economics of green hydrogen production are not yet competitive with diesel. As of 2025, the global cost range for green hydrogen is wide, from $4.00 to $12.00/kg. For comparison, the most common form, grey hydrogen (produced from natural gas), costs only about $1.00-$3.00/kg. The price difference is a massive drag on adoption.

For a hydrogen fuel cell truck's TCO to truly compete with a long-haul diesel truck, the hydrogen price needs to drop to about $2.50/kg. Some aggressive targets aim for a cost of $1.50/kg in certain markets by the end of 2025, which would begin to achieve fossil parity. Until the Department of Energy's goal of $1.00 per kilogram by 2030 is realized, Nikola must rely heavily on government incentives like the US Inflation Reduction Act (IRA) tax credits to bridge this economic gap.

Inflation pressures on raw materials and labor strain manufacturing margins.

Inflation continues to put immense pressure on Nikola's manufacturing margins, a key metric for its survival. The company is still operating at a significant gross loss. In the first half of 2024, the estimated average building cost per truck was a staggering $1.25 million, while the average selling price was only about $320,000, resulting in a loss of nearly $1 million per truck. This is unsustainable. The company's total cost of revenues increased by 20% to $299.3 million in 2024, leading to a gross loss of $230.4 million.

The core challenge is scaling production to drive down the per-unit cost. The CEO has stated that the goal is to achieve a positive cash contribution margin on every truck as the company transitions into 2025, with an expectation of moving toward a positive gross margin overall as production accelerates. This is the single most important financial target. The strain comes from:

• High raw material costs, even with some commodity price stabilization.
• Labor costs, driven by general wage inflation in the US manufacturing sector.
• Low production volume, which prevents the realization of economies of scale.

The path to profitability in 2025 is a tightrope walk between increasing sales volume and aggressively cutting the bill of materials (BOM) cost per truck.

Nikola Corporation (NKLA) - PESTLE Analysis: Social factors

Growing corporate focus on Environmental, Social, and Governance (ESG) mandates fleet decarbonization.

The corporate shift toward Environmental, Social, and Governance (ESG) is a massive tailwind for zero-emission commercial vehicles, but the failure of Nikola Corporation shows that a strong mission isn't enough. The demand signal from large fleet operators for decarbonization remains incredibly strong because medium and heavy-duty trucking accounts for approximately 23% of the transportation industry's direct U.S. greenhouse gas (GHG) emissions. This pressure is why Nikola's entire business model was built on pioneering zero-emission solutions.

However, the company's Chapter 11 bankruptcy filing in February 2025 highlights the risk: the market will not sustain a company on ESG promises alone if the underlying business, operational, and governance structures are defintely flawed. The ESG mandate is a powerful external force, but it only creates an opportunity for a company that can execute.

Public perception remains sensitive to past corporate governance issues; trust is a factor.

Trust is the single biggest social hurdle Nikola Corporation faced, and the events of 2025 cemented that challenge. The company's reputation was already severely damaged by the conviction of its founder and former CEO, Trevor Milton, for securities and wire fraud, plus the 2023 recall of nearly all its battery-electric trucks following battery fires.

The ultimate blow to public and investor confidence was the February 19, 2025, Chapter 11 bankruptcy filing, which led to the orderly wind-down of the business and the piecemeal sale of its assets, including the intellectual property (IP) and inventory, to Hyroad Energy. This outcome confirms the market's deep skepticism regarding the company's ability to overcome its governance issues and achieve commercial viability. The perception shifted from a pioneering start-up to a cautionary tale of corporate failure.

Here's the quick math on the governance impact: the stock hit a high of $79.73 in June 2020 but traded at around $0.56 a share prior to the bankruptcy filing, a loss of over 95% of value over three years. That's the cost of lost trust.

Shortage of skilled technicians for maintenance of complex electric and fuel cell powertrains.

The lack of a specialized workforce is a major social constraint for the entire zero-emission heavy-duty vehicle sector, including the hydrogen fuel cell technology Nikola pioneered. These complex powertrains require technicians with specialized training in high-voltage systems and battery management, a skill set that is currently scarce in the U.S. auto service industry.

The U.S. Bureau of Labor Statistics estimates the country will face a shortage of 35,000 electric vehicle (EV) technicians by 2028. As of a recent count, only about 3,100 mechanics were certified to service EVs, representing just 1.4% of all certified mechanics. This shortage would have created significant service bottlenecks and increased downtime for Nikola's fleet customers, a critical operational factor for commercial carriers.

The situation is acute because the existing workforce is aging, and training programs are struggling to keep pace with the rapid technological shift.

Consumer and investor demand favors sustainable, zero-emission transport solutions.

Despite Nikola's corporate failure, the underlying demand for the technology remains a powerful social factor. Investor capital is committed to the transition, with $68 billion invested across the U.S. in the manufacturing and deployment of clean energy and green vehicles in the second quarter of 2025.

Market forecasts show a clear long-term direction: heavy-duty Fuel Cell Electric Vehicle (FCEV) trucks in operation are anticipated to grow at a Compound Annual Growth Rate (CAGR) of 55.3% from 2025 to 2035. This demand is driven by the FCEV's suitability for long-haul applications, where its lighter weight and faster refueling times are critical.

However, the near-term picture in the US is volatile. In the first half of 2025 (1H 2025), zero-emission truck adoption in the US plummeted, with fewer than 200 e-trucks sold, down about 80% compared to the same period in 2024. This drop was largely attributed to policy uncertainty and a temporary lack of demand, showing that while the long-term social trend is green, the short-term commercial market is highly sensitive to policy and macroeconomic factors.

The table below summarizes the contrasting market signals for the zero-emission truck segment in 2025:

Nikola Corporation (NKLA) - PESTLE Analysis: Technological factors

The technological landscape for Nikola Corporation is a high-stakes race between hydrogen fuel cell maturity and the relentless progress of battery-electric vehicle (BEV) technology. Your investment thesis hinges on Nikola's ability to execute its integrated strategy, where the truck's technology, the fuel cell, and the refueling network all have to work flawlessly together.

Rapid advancements in battery energy density challenge hydrogen's range advantage.

Hydrogen Fuel Cell Electric Vehicles (FCEVs) like the Nikola Tre FCEV currently hold a clear advantage in range and refueling speed, which is critical for Class 8 long-haul trucking. The Tre FCEV offers a maximum range of 500 miles and can be refueled in less than 20 minutes. But here's the quick math: the battery-electric competition is closing the gap fast. Nikola's own Tre BEV, aimed at metro-regional routes, has a total battery capacity of 733 kWh for a maximum range of 330 miles.

The cost of the BEV's power source is also dropping sharply. Nikola is targeting a reduction in battery cost from approximately $150/kWh in 2024 to $100/kWh by 2025. If battery energy density continues to climb while costs fall, the FCEV's range premium will become less of a differentiator for all but the most demanding, continuous-haul routes. This is a constant pressure point.

Fuel cell durability and stack life improvements are defintely needed for total cost of ownership.

For fleets, the Total Cost of Ownership (TCO) is the only number that matters. The durability of the fuel cell stack is a massive component of that TCO. The industry benchmark for new-generation fuel cell stacks is reaching 25,000 operating hours, and this level of longevity is what's required to make FCEVs truly cost-competitive with diesel trucks over their lifecycle. Nikola's Tre FCEV uses a 200 kW Bosch fuel cell power module, and its long-term reliability is paramount.

If the stack life falls short, the replacement cost-a major capital expense-will erode any fuel savings and government incentives. What this estimate hides is the real-world maintenance and repair costs, which are still being validated across the industry. We need to see Nikola's FCEVs consistently hitting these high operational hour targets in fleet use to justify the premium over diesel or BEV alternatives.

Building out the hydrogen fueling station network remains a massive technical and logistical hurdle.

The hydrogen ecosystem, branded HYLA, is the critical enabler for the FCEV business model, but its build-out is a massive, capital-intensive logistical challenge. Nikola had a goal of having 10 HYLA fueling solutions operational by year-end 2024, with plans for up to 60 stations nationwide in the coming years. This is a slow, expensive ramp-up.

The good news is the network is growing: a new HYLA modular refueling station in West Sacramento, California, became commercially operational in January 2025. This single station is designed to fuel up to 20 Class 8 trucks daily, which gives you a sense of the necessary capacity. Plus, Nikola is partnering with Voltera to develop up to 50 HYLA stations over the next five years, which helps de-risk the capital outlay. Still, the density of a hydrogen network is nowhere near the ubiquity of diesel, and that's a major adoption barrier for fleets.

Nikola's proprietary software and vehicle integration must be best-in-class to win fleet contracts.

Winning large fleet contracts isn't just about the hardware; it's about uptime, diagnostics, and data integration. Nikola is positioning its vehicles as software-defined vehicles (SDVs), which means the truck's performance and maintenance are managed digitally. Their SDV technology includes over 3.5 million lines of code for critical controls.

This software focus is key to their service model. The Nikola Pulse app allows their customer service teams to take a daily pulse on vehicle health, which helps improve uptime-the single most important metric for a fleet manager. Furthermore, Nikola is making the PlusDrive advanced driver assistance system (ADAS) from Plus a standard feature in its trucks, with updated BEVs having already surpassed 1 million in-service miles by January 2025. Integrating advanced safety and telematics is non-negotiable for large, sophisticated fleet customers like Kenan Advantage Group and DHL Supply Chain, who are now deploying Nikola FCEVs.

• Integrate advanced safety features to secure fleet contracts.
• Use the Nikola Pulse app for remote diagnostics and better uptime.
• Leverage 3.5 million lines of code for vehicle control and over-the-air updates.

Nikola Corporation (NKLA) - PESTLE Analysis: Legal factors

Ongoing litigation and regulatory scrutiny from past business practices still pose financial risk.

The most significant legal factor for Nikola Corporation in 2025 is its legal status as a company in liquidation following its Chapter 11 bankruptcy filing on February 19, 2025. This filing, along with the subsequent asset sale process, is the legal framework governing all financial outcomes. The legacy of past business practices continues to drain remaining value through settlements, even in bankruptcy.

You need to understand the definitive costs tied to these past issues. The company's liquidation plan includes an $83 million settlement with the U.S. Securities and Exchange Commission (SEC) for prior misleading statements. This is split into a $43 million unsecured claim and a $40 million junior claim in the bankruptcy proceedings. Additionally, the Delaware Chancery Court finalized a settlement for derivative claims on November 20, 2025, resulting in a $27.45 million cash payout to stockholders. This is a massive legal overhang that has directly contributed to the company's demise.

Here's the quick math on the major, final legal liabilities:

New safety and certification standards for hydrogen storage and fueling systems are evolving.

The legal landscape for hydrogen technology, particularly for the HYLA brand assets now up for sale, is rapidly formalizing. The National Highway Traffic Safety Administration (NHTSA) published a Final Rule on January 17, 2025, establishing two new Federal Motor Vehicle Safety Standards (FMVSS) that directly affect the design and certification of Nikola's core product and infrastructure. These rules become effective on July 16, 2025.

The new standards, based on Global Technical Regulation (GTR) 13, are a double-edged sword: they validate the technology but also impose new compliance costs on any buyer of the assets. The compliance date is set for September 1, 2028, giving a buyer a window to adapt.

• FMVSS 307: Mandates fuel system integrity requirements for hydrogen vehicles during normal operations and after crashes.
• FMVSS 308: Specifies requirements for the Compressed Hydrogen Storage System (CHSS) integrity to prevent leakage and explosion.

Any acquiring entity will defintely need to factor in the cost of re-certifying or modifying the existing truck designs and HYLA station technology to meet these new federal benchmarks.

Intellectual property (IP) protection for core fuel cell and electric drivetrain technology is vital.

In a Chapter 11 sale, the Intellectual Property (IP) is one of the last and most valuable intangible assets. The value of Nikola's IP-which includes its fuel cell and electric drivetrain technology-is being tested by the market as administrators finalize the sale process. The court approved the hiring of Hilco Streambank in June 2025 to market these intangible assets, a clear signal that the IP is being shopped to strategic buyers.

The strength of this IP portfolio is what will determine the recovery for creditors. The portfolio is substantial, encompassing:

• 46 U.S. utility patents and 51 foreign utility patents.
• Proprietary truck management software and trade secrets.
• Designs and R&D data for hydrogen systems, thermal, and power management.

The IP's legal protection is paramount, as a buyer needs assurance that the patents are defensible against competitors. The IP's value is also bolstered by the fact that the Coolidge manufacturing plant was already sold to Lucid for $30 million in April 2025, suggesting that the IP is now the most concentrated remaining asset of technological value.

Compliance with complex international trade and tariff regulations for imported components.

While Nikola Corporation is in liquidation, the value of its remaining inventory, supply contracts, and technology is heavily influenced by the volatile international trade environment of 2025. The intensifying trade war, particularly with China, introduces a significant cost variable for any potential buyer of Nikola's assets who plans to restart manufacturing.

The US government has sharply increased tariffs on key EV components, which impacts the cost basis of the supply chain Nikola had established. For instance, the US Commerce Department imposed steep tariffs of 93.5% on refined graphite from China in July 2025, a critical battery ingredient. Also, tariffs on Chinese semiconductors are set to double to 50% by 2025. A buyer acquiring Nikola's designs and supply chain agreements must immediately price in these elevated import duties, which makes the cost-of-goods-sold (COGS) for the next generation of trucks significantly higher than originally projected. This regulatory uncertainty directly discounts the value of the assets being sold.

Nikola Corporation (NKLA) - PESTLE Analysis: Environmental factors

Hydrogen production must be truly 'green' (from renewables) to justify the environmental premium.

The environmental integrity of Nikola Corporation's core product-the hydrogen Fuel Cell Electric Vehicle (FCEV)-is entirely dependent on the source of its fuel. The market demands truly 'green' hydrogen, which is produced via electrolysis powered by 100% renewable energy, to justify the environmental premium over Battery Electric Vehicles (BEVs). Right now, the path is mixed.

Nikola's energy brand, HYLA, is focused on developing a low-carbon hydrogen ecosystem. A significant financial driver for this is the U.S. Inflation Reduction Act (IRA), which offers a Clean Hydrogen Production Tax Credit of up to $3.00 per kilogram of clean hydrogen produced, a massive subsidy that makes the economics work. However, some of their early supply chain, such as the 20% stake in Wabash Valley Resources (WVR), relies on carbon capture and sequestration (CCS) to produce 'blue' or 'low-carbon' hydrogen, not purely 'green' hydrogen. This is a crucial distinction for environmentally-conscious fleets.

The company's goal to build 60 hydrogen fueling stations by 2026 across North America shows the scale of their ambition, but the recent acquisition of 113 Nikola Tre FCEVs and related HYLA assets by Hyroad Energy in late 2025, following Nikola's Chapter 11 filing, introduces execution risk and a new partner into the supply chain. This is a defintely a complex situation.

The energy efficiency of the 'well-to-wheel' hydrogen pathway is under constant scrutiny.

The 'well-to-wheel' (WTW) energy efficiency of the hydrogen pathway remains a fundamental challenge and a point of scrutiny for investors and environmental groups. This metric measures the total energy lost from the source (renewable electricity) to the power delivered at the truck's wheels.

For Nikola's FCEVs, the WTW efficiency is inherently lower than for a BEV because of the energy-intensive steps: electrolysis, compression, transport, and conversion back to electricity in the fuel cell. I look at the numbers, and the difference is stark.

This means a renewable energy source can power roughly three times more BEVs than FCEVs for the same distance. Still, for the heavy-duty, long-haul Class 8 segment where Nikola competes, the FCEV's rapid 3-5 minute refueling time is a major operational advantage that often outweighs the efficiency penalty for fleet operators focused on uptime. Nikola's FCEVs have demonstrated an average fuel economy of 7.2 mi/kg in real-world fleet use, which is an estimated 23% better than the Class 8 diesel average of 6.5 diesel gallon equivalent (DGE).

Disposal and recycling of large-format lithium-ion battery packs require new processes.

Even with the FCEV focus, Nikola's Tre BEV trucks and the battery packs in their FCEVs require a robust, circular economy solution for end-of-life (EoL) management. These large-format lithium-ion battery packs contain critical and ethically-sensitive materials like lithium, cobalt, and nickel.

Nikola has made strong commitments in this area, which is a significant environmental opportunity.

• Recycled 100% of scrapped lithium-ion batteries in 2023.
• Reclaimed 95% of lithium-ion battery materials through circular economy initiatives.
• Reused 192 metric tons of batteries and components in 2023.

This focus on remanufacturing, reuse, and recycling is a core part of their battery circularity policy, aiming to keep valuable materials in the domestic supply chain. The broader Li-ion battery recycling market is forecast to reach $23.9 billion by 2030, showing the scale of this emerging industry that Nikola must navigate.

Zero-emission vehicle mandates are accelerating the retirement of diesel fleets.

The regulatory environment is a major tailwind for zero-emission vehicles (ZEVs), but it's also highly volatile in 2025. The core driver for Nikola is the push to accelerate the retirement of high-polluting diesel fleets.

The fragmentation of US policy is the current risk. The California Air Resources Board (CARB) Advanced Clean Trucks (ACT) rule, which mandates ZEV sales targets for manufacturers, is still being enforced in California. However, in May 2025, the U.S. Senate revoked the EPA waivers that allowed other states to adopt the ACT rule, effectively halting the mandate in states like New York, New Jersey, and Oregon.

What this estimate hides is that the federal government is still pushing its own fleet to ZEVs, with a target of 100% ZEV acquisitions by 2035 for the Federal fleet. This dual-market reality means Nikola's sales strategy must be hyper-focused on California and other states that maintain strong incentives, like the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), where Nikola has held a dominant 99% share of fuel cell vouchers. The overall US market for e-trucks is slowing, with fewer than 200 units sold in the first half of 2025, which underscores the importance of those state-level mandates and incentives for the company's near-term sales.