What you need to know:
- Nikola’s creditors have subpoenaed LG Energy Solution (LGES) over allegedly defective lithium-ion battery cells linked to battery fires in 209 examples of Nikola’s electric semi trucks, which were recalled in August 2023 due to coolant leaks causing fires.
- The subpoena alleges that the defective LG battery cells caused “thermal events” resulting in tens of millions of dollars in damages for Nikola.
- Nikola previously proposed a $250 million settlement in cash and future sales credits to LG to avoid litigation, but LG refused, citing jurisdictional issues.
- The subpoena objection deadline is August 13, 2025, with a hearing set for August 21, 2025.
Counsel to the official committee of unsecured creditors of bankrupt Nikola Corporation have subpoenaed battery manufacturer LG Energy Solution (LGES) over allegedly defective battery cells linked to 209 of Nikola’s battery-electric semi trucks, which were recalled in August 2023 due to coolant leaks that led to fires.
The coolant leaks, however, may have only been part of the problem.
The subpoena, filed on August 6 in the U.S. Bankruptcy Court for the District of Delaware, states there were "defective cylindrical lithium-ion battery cells (the “LG Cells”) that LG supplied to the Debtors (Nikola) that resulted in numerous “thermal events” that caused the Debtors to incur damages in the tens of millions of dollars."
Nikola and LG had a long-term deal in place for the latter to supply lithium-ion batteries for Nikola's heavy-duty, battery-electric trucks beginning in 2022 until 2029.
[Related: Nikola's CEO and software chief provide exclusive walkthrough of improved BEV 2.0]
The creditors, who in June subpoenaed Nikola founder Trevor Milton for owing Nikola nearly $100 million following a 2023 arbitration ruling, are now requesting for LG to come forward with additional details regarding the allegedly defective batteries.
[Related: Trump pardons Nikola founder, convicted felon Trevor Milton]
What the subpoena reveals...
The subpoena clarifies that Nikola immediately and rightly launched an investigation to determine the cause of the fire just as additional examples of the first-generation BEV semi's battery packs caught on fire as well. Nikola soon discovered a correlation between the fires and the battery cells, which were manufactured in China.
In May 2024, the subpoena states that "Nikola sent a demand letter to LG in which Nikola claimed to have established that defective LG Cells had caused Nikola up to a billion dollars of damages, including tens of millions of dollars in costs associated with having to recall the BEVs to replace their battery packs. Nikola and LG subsequently engaged in discussions about how to resolve their dispute but failed to resolve the dispute prior to the filing of the Chapter 11 Cases."
What's interesting is that it appears LG did not directly deny battery defects in its discussions with Nikola.
Creditors must now prove that LG's battery cells did contribute, opening the company — and potentially China — to negative exposure.
They have may have the evidence to do so.
The subpoena further reveals: "Around May 2024, Nikola sent a demand letter to LG in which Nikola claimed to have established that defective LG Cells had caused Nikola up to a billion dollars of damages, including tens of millions of dollars in costs associated with having to recall the BEVs to replace their battery packs. Nikola and LG subsequently engaged in discussions about how to resolve their dispute but failed to resolve the dispute prior to the filing of the Chapter 11 Cases."
But it turns out Nikola was willing to settle the dispute for $250 million in cash and future sales credits.
Also disclosed is that attorneys for the creditors and LG met this past June 18 where the latter was presented with the subpoena. "Latham & Watkins, LLP, [counsel representing LG] explained they were "not authorized to agree to anything" because LG is a South Korean company that "would insist upon service of the Subpoena being made pursuant to... the Hague Convention."
There are several Nikola legal documents contained in the subpoena that indicate LG was aware the batteries were faulty. One of which, dated May 20, 2024 and prepared by Britton Worthen, Nikola's executive vice president, chief legal officer, and corporate secretary, to LG Head of Commercial, Jay Kim, states the following:
"As you may know, Nikola and LGES have been working together since January of this year to determine the cause of Nikola battery electric vehicle (BEV) fires that occurred last year. Nikola’s results, bolstered by three separate independent engineering consultants, continues to show a clear 100% correlation between LGES cells manufactured in China and all fire events. Nothing has changed in our claims or results in the last four months of working together. In fact, further testing which we have continued to share with you has bolstered this conclusion."
It concludes by confirming the $250 million settlement proposal.
"A defect in the manufacture of LGES cells caused fires in Nikola vehicles. We believe a fruitful dialog would produce a settlement in the range of $250 million. Potentially, we could discuss not only a cash payment, but also a portion of the settlement as a credit toward future battery sales. Nikola is interested in avoiding any type of legal avenue to recover the significant damage it has sustained, at this time."
What happens now?
The subpoena has a August 13, 2025 objection deadline and a hearing date of August 21.
There's no information whether LG has requested any delays, so hopefully there will be more details to report on in the coming days.
