Less than a month after getting listed in a reverse merger, Nikola Corporation (NASDAQ:NKLA) is opening pre-orders for its Badger pickup truck.
Imitation is indeed the sincerest form of flattery, but Nikola simply cannot pull it off like Tesla (NASDAQ:TSLA).
Everything about Nikola’s plans suggests minimal regard for would-be buyers.
Attempts to copy Tesla are poorly thought out and will backfire. There’s no question that Nikola is setting itself up for disappointment. And there are at least three reasons why.
Tesla is arguably the world’s best known electric carmaker. And unlike Nikola, Tesla showcases a prototype before it lets customers pre-order a new product.
So, what in the world is Nikola–a virtually unknown company–thinking by launching reservations on an expensive product before showing a demo? You need massive doses of faith and a fertile imagination to reserve a product based purely on a computer rendering.
Nikola is hoping to achieve a lot with Badger. Just take a look at what it said in an SEC document ahead of its public offering:
…the Badger is designed to target and exceed every electric or fossil fuel pickup in its class
Nikola will have no one but itself to blame if the reservation numbers turn out way below expectations.
It could give the excuse that the company is just six years old. But that’s not good enough. A comparable startup Rivian already has prototypes of its R1T truck.
Watch the video of the Rivian electric truck being tested in Arizona below:
For a company that has built brand loyalty and trust over the years, it would be excusable to open reservations without a demo product.
But doing that with a company with zero experience is stretching it too far. Nikola was founded six years ago. So far, it has zero revenues and zero products on the market.
Will the public take such a big leap of faith in a company that no customer on earth has experienced?
For comparison, Tesla has a production history of over a decade. A few months ago, it produced its one-millionth car. Under Tesla’s production history, imperfect as it is, customers already know what to expect.
With Nikola, there is nothing to go by.
Nikola’s executive chairman Trevor Milton is making it abundantly clear that his new automobile is targeting Tesla’s Cybertruck.
Unfortunately, Nikola has shot itself in the foot concerning price.
The Badger’s reservation price is also steep–up to a maximum of $5,000. Meanwhile, to reserve a Cybertruck, all you need is $100 (and it’s refundable, too).
In the case of the Badger, $250 of the reservation fee will be deducted if the pre-orderer attends a company event scheduled later this year.
Nikola is now trying to juice up reservation orders by offering $500-$10,000 discounts on the purchase price for those pre-ordering. That, however, won’t change the fact that the pre-orders will be underwhelming.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. The author holds no investment position in the above-mentioned securities.