The order includes 2,500 electrified chassis, with the option to increase it up to 5,000 units, the aspiring zero-emissions truck manufacturer said in a release. The company expects manufacturing and testing of the trucks to begin in early 2022, followed by deliveries in 2023.
The company's shares jumped as much as 24.5% to an intraday high of $45.72 a share before closing at $44.81 a share, up 22%.
The announcement of a commercial order is one of three milestones Nikola promised investors it would deliver on this year. The others are partnerships for manufacturing of its all-electric Badger pickup and hydrogen fueling stations for its semi-trucks.
The companies at first declined to disclose financial details of the deal other than Republic Services did not have to make any down payments for the trucks. Later in the day, Nikola founder and Executive Chairman Trevor Milton tweeted that the binding truck order was worth $1 billion to $2 billion.
Milton during a call Monday with reporters said the profit margins of the vehicles would be "very good."
Milton characterized the deal as a partnership between the companies through the life cycle of the vehicles.
"They're our anchor for the refuse market," Milton said, adding the deal is not exclusive to the company, which will allow Nikola to sell the vehicles to other refuse companies.
The refuse market is one of the most stable markets in the industry and provides long-term shareholder value, Milton said.
Nikola said the truck is expected to offer up to 150 miles on a single charge, according to a release. The truck is anticipated to outperform current diesel and natural gas competitors, according to the company.
Nikola said the order is the largest "in the waste industry and signals Republic Services' commitment to zero-emission vehicles."
The refuse truck chassis and powertrain will be shared with the company's previously announced "Tre" semi-truck.
Nikola went public June 4 after a reverse merger with VectoIQ, a publicly traded special purpose acquisition company headed by former General Motors Vice Chairman Stephen Girsky. Its stock has been a roller-coaster ride since then.
The company recently started building a $600 million factory in Arizona for production of its commercial trucks, including the garbage trucks. At full production on two shifts, Nikola expects the facility to produce 35,000 vehicles annually.
The first Nikola commercial trucks will be produced in Germany with industrial vehicle manufacturer Iveco, followed shortly after by the Arizona plant.
Republic Services is the second-largest recycling and solid waste provider in the U.S. The company said it has about 18,000 trucks in its fleet.