General motors is taking a $2bn equity risk in arizona-based electric and hydrogen car manufacturer nikola, with plans to supply it with battery packs and build among its vehicles.

The detroit carmaker will acquire 11 percent of the business, based on gm leader mary barra. in trade, gm will engineer and produce the badger vehicle for nikola, while permitting the start-up to access gm-approved components and elements. one form of the truck uses gms ultium batteries, while another uses its hydrotec fuel cellular system.

Nikola plans to issue $2bn in new shares for offer. the start-up had market capitalisation of greater than $13bn yesterday, although it has however to make or offer a vehicle. the stock increased 37 percent in early morning trading, while gm stocks rose 8 %.

The deal spared nikola billions as it could sidestep building a factory and building an offer string, stated nikola creator and government president trevor milton. nikola, located in phoenix, arizona, ended up being designing the badgers interior and outside and will manage sales, solution and warranty, while gms technology would run the car.

In this way we could started to market quickly, mr milton said. we could never do that on our own.

Were going to be swapping out our platform for theirs, he included.

The move will expand product sales of gms ultium electric batteries and hydrotec fuel mobile systems. honda, with which gm features partnered for decades, happens to be the most known customer to date of gms battery packs.

Another organization selecting gms technology over rivals underscored its worth and we can get scale more quickly to bring expenses down, ms barra stated.

She disagreed that gms investment would necessarily help produce a rival, akin to toyota trading $50m in tesla in 2010 before selling its share seven many years later.

Theres space not just the nikola badger however the gmc hummer, she said.

Nikola said the offer would save the business $4bn in electric battery and power-train prices within the next decade, and $1bn in charges for engineering and validating car components.

Nikola immediately gets years of provider and manufacturing knowledge, validated and tested production-ready [electric vehicle] propulsion, world-class engineering and buyer confidence, mr milton stated.

First and foremost, general motors has a vested interest to see nikola succeed.

Gm said that form shares, it would obtain another $2bn in advantages from contracts to manufacture the badger and offer the battery packs and fuel cells, and electric vehicle credits which is retained on the lifetime of the contract.

The offer expands the usage of gms gas cell technology into heavy-duty commercial vehicle market and presents a high-volume commercialisation associated with the hydrotec gas cell system, gm said.

The badger, announced in february, are going to be openly unveiled at the beginning of december. the vehicle, which nikola said it can start making the following year, is scheduled to start out production in late 2022 at a spot your companies will announce later on.

The deal fundamentally covers various other nikola vehicles, like the tre, one, two and nzt.

The deal is expected to close on september 30.