JPMorgan analyst Paul Coster believes Nikola (NKLA) and General Motors (GM) are still likely to enter into a strategic partnership by December 3. Nikola needs access to General Motors' supply chain and engineering resources while GM needs to realize a return on billions of dollars of investment in hydrogen fuel cells, and Nikola might be the best available option, the analyst contended.

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PARTNERSHIP STILL LIKELY BY DECEMBER 3: In a research note to investors, JPMorgan analyst Paul Coster said he believes Nikola and General Motors are still likely to enter into a strategic partnership by December 3. Nikola needs access to General Motors' supply chain and engineering resources while GM needs to realize a return on billions of dollars of investment in hydrogen fuel cells, and Nikola might be the best available option, Coster contended. Further, the Badger initiative might be of more interest to GM than Nikola, "for whom it seems to be a distraction," the analyst added.

Coster thinks GM and Nikola "remain locked in dialog" and that a restructured deal "still seems probable." Given the delay versus the original expectations for a September close, he suspects that the companies are evaluating many alternatives, and some investors believe GM will walk away from the deal completely. Coster thinks this is unlikely and believes a more probable scenario is that the deal closes with the original terms, or it is re-engineered for a narrower scope that eliminates or down-sizes the Badger initiative. But walking away from the deal completely seems unsatisfactory for both parties as Nikola loses access to resources that de-risk its Class 8 truck initiatives, and GM will need to find an alternative way of realizing a return on its massive investment in Hydrogen technology or attract scrutiny for not doing so, he argued. He kept an Overweight rating on Nikola with a $41 price target.

CEO SAYS NIKOLA CAN GO IT ALONE: Shares of Nikola were under pressure on Friday after the company's CEO, Mark Russell, gave interviews in which he was quoted as saying the company has a "base plan" to go it alone if deal talks with General Motors fall through and attempted to distance the company from the prior statements of its founder, Trevor Milton, regarding the still-in-development Badger pick-up truck.

"The Badger was an interesting and exciting project to some shareholders, but our institutional shareholders are mostly focused on the business plan," Mark Russell told the Financial Times in an interview published on Thursday, October 15. Russell added, according to the FT's report, that the company's "core business plan since before we became publicly listed always focused on heavy trucks and hydrogen infrastructure."

Talks between the company and General Motors on a proposed strategic partnership are ongoing, but if a tentative technology-sharing and manufacturing deal falls apart, Nikola can revert to a "base plan" without GM's help, Russell is quoted by Bloomberg as having said. "We have the ability and we have a base plan of doing it ourselves. If we have a partner, that just enables us to consider going faster and helps reduce the risk. We've proven that over the years that we are a partnership company when those things are available to us," Russell added. A GM spokesman declined to comment to either the FT or Bloomberg, both news services stated.

PRICE ACTION: In afternoon trading, shares of Nikola have gained almost 5% to $20.45, while GM's stock is fractionally up at $33.46.