Nikola filed for Chapter 11 bankruptcy due to significant financial challenges, including market and macroeconomic factors, and the financial impact of recalling its battery-powered vehicles. The company also faced difficulties in raising capital and reducing liabilities despite efforts to do so.

The fraud scandal involving Trevor Milton significantly damaged Nikola's reputation and contributed to its financial struggles. Milton's conviction for misleading investors about the company's technology led to a loss of investor confidence and a decline in the company's stock price.

Nikola plans to auction its assets to maximize value for shareholders and ensure an orderly wind-down of its businesses. The company will continue limited service and support operations for vehicles on the road until the end of March, subject to court approval, and will need additional funding to sustain these activities beyond that date.

Nikola's bankruptcy reflects a growing trend among electric vehicle startups facing significant challenges, including fierce competition and dwindling demand in the current economic climate. Other EV startups, like Lordstown Motors and Fisker, have also encountered similar difficulties.