According tomedia The Verge, the year-old Lordstown Motors will become a public company in an effort to bring its commercial electric pickup, Endurance, to market. According to financial documents, it will do the job with GM’s support, which is greater than previously known.
The start-up plans to list on the NASDAQ Stock Exchange under the ticker symbol “RIDE” by combining with a special purpose acquisition company called DiamondPeak, where the company’s shares are already traded. This is in line with the “reverse merger” taken by Nikola, a hydrogen truck company, to go public earlier this year, and fisker, an electric car start-up, is now trying to implement the plan. It is also the latest cash to come from a sudden funding boom in the start-up of electric vehicles, where new money has gone to companies such as Karma, China’s Leo And Xiaopeng.
The deal, which is expected to close in the fourth quarter of 2020, will provide about $675 million to Lordstown Motors – more than chief executive Steve Burns told The Verge he believes $450 million is needed to bring Endurance into production by mid-2021.
The Endurance, which debuted in June, is a full-size electric pickup with a range of about 250 miles. A standout feature of this truck is that it is driven by four electric hub motors, one in each wheel (rather than placing them on the axle). This allows it to accurately deliver different amounts of torque to each wheel, which helps in difficult driving conditions. The truck starts at $52,500.
Lordstown Motors is entering a highly competitive electric car market, including electric pickups from Tesla, Ford, General Motors, Rivian and Nikola. Speaking at the Endurance unveiling, Burns said his start-up “will beat all the companies entering the market”, but he believes The advantage of Lordstown Motors is to focus on making specialized work cars and sell only to fleets. The start-up also has an advantage over most other companies because it already has a factory: a plant in Lordstown, Ohio, that was once occupied by General Motors.
Burns has extensive experience developing vehicles for commercial fleets because he has previously run Workhorse, a similar electric vehicle start-up. Last year, Lordstown Motors was somewhat stripped out of Workhorse. Gm is under pressure from the Trump administration to find a buyer after it closed its Lordstown plant. Workhorse spent years developing a pickup truck while developers used electric trucks and vans, but faltered as sales dried up and bidding for the next generation of U.S. Postal Service vehicles stalled.
In May 2019, Mr. Trump tweeted a surprising and inexplicable message: Mary Barra, GM’s CEO, informed him that her company was selling the plant to Workhorse. Although never profitable and largely survived by a series of life-saving straws from hedge funds, Mr. Trump said it was “good news” for Ohio!
But Workhorse didn’t buy the factory. Instead, Burns (who left Workhorse) founded The Lordstown Motor Company, which is said to have borrowed $40m from General Motors to buy the plant. Workhorse sold the pickup’s intellectual property to Lordstown Motors for $15.8 million and acquired a 10 per cent stake in the start-up. Burns and Lordstown Motors also agreed to give Workhorse a 1 per cent stake in each Endurance truck sold (the first 200,000) and 1 per cent of any debt or equity financing – meaning Burns’ old start-up will also benefit from the Rollstown Motors listing.
Lordstown Motors’ ties to GM have not stopped on factory loans. GM will invest $75m in the listing and get a seat on the start-up’s board of directors , according to investors filed with the Securities and Exchange Commission . The other $50 million comes in the form of “plant assets,” “plant licenses” and plant operating costs that GM has undertaken since it took over in November 2019. Lordstown Motors will use “GM parts” in Endurance as the Detroit carmaker is linking the start-up to its tier-one supply chain.
Although GM has launched its own electric pickup in the form of Hummer trucks and full-size Chevrolet models, the company has recently tried to invest in another electric vehicle start-up. Rivian, but GM was ultimately turned down by the start-up after trying to negotiate an exclusive deal. The Rivian eventually took $500m from Ford (and more from Amazon) and will work together on at least one car for the Lincoln brand.