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Cypress Losing EV Jobs as Nikola Consolidates

Romeo Power production closing by July

Romeo Power Inc.’s tenure as a public company based in Orange County was a short one, with the electric vehicle battery maker acquired last October by EV truck maker Nikola Corp., just months after Romeo had moved its headquarters and operations from Vernon in Los Angeles County to a new facility in Cypress.

Now the future of one of OC’s larger firms in the EV industry, with hundreds of local jobs, is in question following Nikola’s decision to move battery production out of Cypress to Arizona.

Phoenix-based Nikola said in a statement Jan. 13 it is shifting its recently acquired and practically new EV battery manufacturing operations to its assembly plant in Coolidge, Ariz., about 50 miles from Phoenix.

Nikola (Nasdaq: NKLA) took over the Cypress battery manufacturing facility when it completed its $144 million acquisition of Romeo Power, which makes battery packs and modules for electric vehicles.

Following the sale, Romeo’s 215,000-square-foot base along Katella Avenue was labeled Nikola’s “battery center of excellence.”

Romeo had more than 300 employees as of last summer. Much of its executive team departed the company after the sale to Nikola, which was first announced in August 2022. Nikola had about 900 employees as of early 2022.

The Cypress production facility, which was leased, will close by this July, Nikola said in the statement.

The space, owned by Warland Investments Co., is expected to be listed for sublease.

Under Evaluation

Nikola, a maker of battery-electric and hydrogen-electric powered trucks, also said on Jan. 13 that “a battery engineering presence is expected to remain in California at a separate facility.” There was no further word on the location of the facility or its size.

Nikola was short on further details when contacted by the Business Journal.

Nikola said that it was “still in the process of evaluating” when asked how many jobs may be moved from Cypress and was also evaluating the details regarding the “battery engineering presence” that’s expected to stay in California.

It said the city of Cypress was not involved in the decision to close the production facility.

“This was a corporate decision to work towards improving quality and increasing efficiencies,” according to Nikola.

Nikola was Romeo Power’s largest customer before the acquisition and as of early 2022 was committed to purchasing about $243 million of the company’s battery modules and packs, according to regulatory filings.

Trucks, Buses

Romeo Power’s products are designed for commercial vehicles such as trucks, buses and delivery vans.

“The move, which the company expects to complete by early Q3, brings Nikola’s truck assembly, fuel cell power module assembly, and battery module and pack production under one roof and includes battery line automation geared toward improving quality and increasing efficiencies,” Nikola said of the production shift.

Nikola has been caught up in the economic forces buffeting EVs as the U.S. economy faces a much-predicted recession.

Shares in Nikola were trading at $2.55 apiece as of Jan. 13, a steep drop from $8.63 a year ago. The company is now valued around $1.3 billion.

“This decision reinforces our commitment to finding ways to optimize our cost structure and create a sustainable business model,” Michael Lohscheller, Nikola president and CEO, said of the battery production relocation. “We remain focused on meeting our 2023 milestones, including pack and module production targets.”




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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal

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