Shares of General Motors jumped 9% in afternoon trade today, and EV company Nikola spiked more than 40%, following an announcement by the companies that they have entered a partnership which will see Nikola utilize GM’s Ultium battery system and Hydrotec fuel cell technology. General Motors will engineer, homologate, validate and manufacture the Nikola Badger pickup truck battery electric and fuel cell versions, and will be the exclusive supplier of fuel cells globally (outside of Europe) to Nikola for Class 7/8 trucks.

According to the terms of the deal, GM will receive $2 billion in newly issued Nikola common stock, comprising an 11% ownership stake, in exchange for in-kind services and access to General Motors’ global safety-tested and validated parts and components. GM stated that it anticipates receiving in excess of $4 billion of benefits between the equity value of the shares, contract manufacturing of the Badger, supply contracts for batteries and fuel cells, and EV credits retained over the life of the contract.

According to GM, the deal represents a significant commercialization milestone for the company’s technology, providing validation and scale in a multi-billion dollar total addressable market. The agreement with Nikola extends General Motors’ utilization of its fuel cell technology to the Class 7/8 semi-truck market and represents a high-volume commercialization of its Hydrotec fuel cell system and complements the company’s battery-electric propulsion.

General Motors Chairman and CEO Mary Barra, said:

“This strategic partnership with Nikola, an industry leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems. We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability. In addition, applying General Motors’ electrified technology solutions to the heavy-duty class of commercial vehicles is another important step in fulfilling our vision of a zero-emissions future.”

Nikola anticipates the deal will result in savings of over $4 billion in battery and powertrain costs over 10 years, and more than $1 billion in engineering and validation costs. The company will be responsible for the sales and marketing for the Badger and will retain the Nikola Badger brand. Badger is expected to make its public debut Dec. 3-5, at Nikola World 2020 in Arizona, and production is expected to start in late 2022.

Nikola Founder and Executive Chairman Trevor Milton, said:

“Nikola is one of the most innovative companies in the world. General Motors is one of the top engineering and manufacturing companies in the world. You couldn’t dream of a better partnership than this. By joining together, we get access to their validated parts for all of our programs, General Motors’ Ultium battery technology and a multi-billion dollar fuel cell program ready for production. Nikola immediately gets decades of supplier and manufacturing knowledge, validated and tested production-ready EV propulsion, world-class engineering and investor confidence. Most importantly, General Motors has a vested interest to see Nikola succeed. We made three promises to our stakeholders and have now fulfilled two out of three promises ahead of schedule. What an exciting announcement.”