The segment of green vehicles in the automobile industry has been growing tremendously not only in India but around the globe. The idea of manufacturing electric cars has been adopted by many established firms. The same idea gave birth to many start-ups globally. However, there have been certain breaches of laws from a startup known as Nikola which is founded by a billionaire, Trevor Milton. In today’s article, we will look at the complete EV startup fraud and the accusations against the founder of Nikola. 

EV fraud

What is the EV startup fraud all about?

Trevor Milton has been accused of misleading investors about the technology for battery-powered and hydrogen-powered vehicles Nikola had hoped to make. The former CEO of Nikola pleaded not guilty at a hearing in Manhattan federal court to two counts of securities fraud and one count of wire fraud over statements he made from November 2019 to September 2020 about Nikola’s products and technology.

However, U.S. Attorney Audrey Strauss said, “Milton lied about nearly every aspect of the business”. Moreover, the Attorney’s office Manhattan accused the 39-year-old billionaire, who resigned as chairman in September, with two counts of securities fraud, including making false statements about the company, and wire fraud. The Securities and Exchange Commission also filed civil securities fraud charges against Milton. 

Prosecutors and the S.E.C. (U.S. Securities and Exchange Commission) said that for nearly a year, Mr. Milton had used social media, television and podcasts to spread “false and misleading statements regarding Nikola’s product and technology.” One such misleading statement, the charging document filed by prosecutors said, concerned the company’s Nikola One long-distance truck prototype. The prototype did not work, contrary to the glowing statements Mr. Milton made about it. 

Moreover, prosecutors alleged it was “wholly missing significant parts, including gears and motors, and the control system was incomplete”. The One was towed on stage the night before its unveiling event, and powered by an external battery. Additionally, it had an airline fitted as there was a slow leak from its air suspension system and the interiors were incomplete so tablet computers were used for the vehicle’s various screens or with mocked up “speedometers, maps, and other information”. A demonstration video showing the One in motion was allegedly created by letting the prototype roll down a hill. The tape was used to hold the door in place to “prevent it from falling off” during the shoot.

In response to the accusations, Milton pleaded not guilty to the criminal charges in a Manhattan courtroom Thursday afternoon. He was freed on a $100 million bond secured against two of his properties in Oakley, Utah. He is barred from contacting investors. He also promised the Badger would be a “fully functioning” vehicle, unlike the “pushers everyone puts out there as a fake vehicle to show everyone what they’re doing”.

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