Nikola deal electrifies General Motors' dilemma

 Traditional automakers rarely get the benefit of the doubt. That's what General Motors is proving again with its deal with Nikola . The Detroit automaker is taking an 11% stake worth some $2 billion in the electric-truck startup and doing most of the heavy lifting in their manufacturing agreement. Yet going on the two companies' stock price moves, shareholders are more convinced by Nikola's side of the story.

In Tuesday morning trading the almost 40% jump in Nikola's shares increased its market value by roughly the $5 billion the company expects to save by bringing in GM. But the boost to GM's stock price of around 9% fell short of its $4 billion-plus tally of the benefits.

If the arrangement unveiled on Tuesday were a typical contract-manufacturing deal, that would make sense. These usually involve one company developing crucial technology and paying another firm to put it together - as Alphabet's Waymo did with Fiat Chrysler Automobiles.

GM will be constructing Nikola's first vehicle, the Badger pickup truck. But it will also provide all-important batteries and fuel cells for the Badger and subsequent models. Nikola's role is for now limited to design, sales and marketing.

Moreover, the benefits Nikola Executive Chairman Trevor Milton expects over the next 10 years are expense savings. GM boss Mary Barra envisions gains from increased revenue and the rising value of its Nikola stake. If shareholders believe her, those ought to be more appealing and open-ended than cost reductions.

GM has experienced similar disparities before, receiving only a modest share-price lift after unveiling its robo-taxi prototype and its Ultium battery earlier this year. Similar reveals from Tesla, for instance, can turbo-boost its stock.

That's in part because Tesla is a pure play on electric and autonomous cars. That's also the case for Nikola, Lordstown Motors and other such ventures that have struck deals to go public via blank-check companies this year.

GM and its long-time rivals have older technology to manage alongside the new. Striking deals with younger players may well open up new revenue streams. But it also probably means cannibalizing their own activities. GM, for example, intends to launch its own electric pickup truck under the Chevrolet brand next year. Only when both are competing for sales will the value of Tuesday's deal become clearer.