The one-year-old Lordstown Motors will become a publicly traded company in an attempt to launch its commercial electric pickup, Endurance. And this will be done with more support from General Motors than was previously known, according to financial documents.
The startup plans to list Nasdaq on the stock exchange under the label “RIDE”, combining it with a special purpose vehicle called DiamondPeak, shares of which are already traded on the stock exchange. This is the same type of “reverse merger” that the hydrogen transport company Nicola withdrew earlier this year to make it public, and that EV launcher Fisker is currently trying to accomplish. It̵
The deal is expected to close in the fourth quarter of 2020 and will provide Lordstown Motors with about $ 675 million in funding – more than $ 450 million, which CEO Steve Burns said On the edge he thought it was necessary to put durability into production by mid-2021.
Unveiled in June, Endurance is a full-size electric pickup with a range of about 250 miles. One of the distinguishing features of the truck is that it is powered by four electric motors on the hub, with one in each wheel (as opposed to placing them on the axle). This makes it possible to accurately deliver different amounts of torque to each wheel, which helps in difficult driving conditions. The truck will start at $ 52,500.
Lordstown Motors is entering what is becoming a highly competitive part of the EV market, with electric pickups coming from Tesla, Ford, GM, Rivian and Nikola. Burns said during Endurance that his startup “will beat everyone in the market,” and believes Lordstown Motors has the advantage of focusing on building targeted work trucks and selling them only to fleets. The starter also has a leg up for most others, as it already has a factory: the Lordstown plant, Ohio, which was previously occupied by GM.
Burns has a history of developing vehicles for commercial fleets, having previously managed colleagues to launch Workhorse electric vehicles. Lordstown Motors was more or less dumped by Workhorse last year. After GM closed the Lordstown plant, it was under pressure from the Trump administration to find a buyer. Workhorse had spent years developing a pickup truck along with its commercial electric trucks and vans, but it disappeared when sales dried up and the offer for the next generation of the United States Postal Service stopped.
In May 2019, Trump tweeted a surprising, puzzling piece of news: GM CEO Mary Barra informed him that her company was selling the plant to Workhorse. Although he was never profitable and survived mostly on a series of hedge funds, Trump said it was “GREAT NEWS ABOUT OHIO!”
But Workhorse did not buy the plant. Instead, Burns (who had left Workhorse) launched Lordstown Motors, which reportedly borrowed $ 40 million from GM to buy the factory. Workhorse sold the intellectual property for its pickup to Lordstown Motors for $ 15.8 million and took a 10 percent stake in the new startup. Burns and Lordstown Motors also agreed to give Workhorse 1% on every Endurance car sold (for the first 200,000) and 1% of any debt or equity financing – meaning that Burns’ old startup also benefits from the publicity of Lordstown Motors.
Lordstown Motors’ ties to GM did not stop at the factory loan. GM invests $ 75 million in the public transaction and gets a seat on the board of directors of start-ups, although only $ 25 million of that is money, according to a presentation by investors to the Securities and Exchange Commission. The remaining $ 50 million is offered in the form of “plant assets”, “production permits” and operating costs at the plant, which GM has covered since Lordstown Motors took over in November 2019. Lordstown Motors will use “GM components” in Endurance, as as the automotive manufacturer in Detroit hooked the launch on its first-tier supply chain.
While GM has its own electric pickups on the road in the form of a Hummer truck and a full-size Chevy model, the company recently tried to invest in another EV startup: Rivian. But GM was eventually halted after trying to negotiate an exclusive deal. Rivian ended up taking $ 500 million from Ford (and much more from Amazon) and will collaborate on at least one vehicle for the Lincoln brand.
Lordstown Motors also appears to have the support of the Trump administration. Beyond Trump’s original factory sales tweet, Vice President Mike Pence appeared at the Endurance presentation. So did Energy Minister Dan Broylett. This could be useful, as Lordstown Motors says it is a “candidate” for a $ 250 million loan from the DOE’s Advanced Vehicle Technology (ATVM) program – the same program that helped put Tesla in the map a decade ago. The DOE has not lent to ATVM for years, and the Trump administration has offered to kill it altogether. But it helps to have friends in high places, especially in this administration.
As pickup sales and electric vehicle sales increase in the United States, Lordstown Motors believes it could generate $ 118 million in revenue next year and $ 1.7 billion in revenue in its first full year of sales in 2022. ., according to the presentation. It is expected to make about 31,000 trucks in 2022, with production more or less doubling every year thereafter. The launch also says it has “the potential to enter the SUV market over time.”