Nikola Corp. is exploring a possible bankruptcy filing, according to people familiar with the matter, following a tumultuous period in which the electric truck maker has swung between stock-market darling and scandal-plagued enterprise. The company is working with a law firm and financial advisers to prepare the potential Chapter 11 filing, which would protect it from creditors amid a cash crunch, the people familiar said, asking not to be identified because they are not authorized to discuss the matter publicly.

The plans aren’t final, and could change, the people said. A representative for Nikola said it was “evaluating a variety of options” — including “a financing as part of a financial restructuring” — in response to questions from Bloomberg.

The Wall Street Journal earlier reported on the potential filing. The company’s shares dropped as much as 45% to 41 cents before markets opened in New York on February 7.

Nikola told Bloomberg in late January that it was working “relentlessly” to raise capital in order to stave off a sale of the company.

The company has been on a dramatic journey since it went public in 2020 through a deal with a special purpose acquisition company. It initially became a favorite of retail investors, who bid up the stock. But it soon crashed, and the company cycled through multiple CEOs after its founder Trevor Milton resigned. He was later convicted of defrauding investors because of his misleading descriptions of the company’s technological progress.

Some of Nikola’s financial trouble stems from issues with its electric big-rig trucks, which were recalled in 2023 after engine fires halted sales.

The company has also faced weak sales. In the first nine months of 2024, Nikola sold about 200 of its hydrogen-electric semi trucks. In October 2024, it said that it had sufficient cash to fund obligations through the first quarter, but not beyond.

At that time, Steve Girksy, the chief executive officer, said on a call with investors that Nikola was “actively talking to lots of potential different partners who value what we do and value what we’ve built.”

Nikola has pursued various paths to bolster its cash, going through several rounds of layoffs. In December 2024, it filed to sell up to $100 million of stock.