The EV funding frenzy rolls on.
One-year-old Lordstown Motors will become a publicly traded company in an effort to bring its commercial electric pickup truck, the Endurance, to market. And it will do this with more support from General Motors than was previously known, according to financial filings.
The startup plans to list on the Nasdaq stock exchange under the ticker “RIDE” by combining with a special purpose acquisition company called DiamondPeak, shares of which already trade on the exchange. It’s the same type of “reverse merger” move that hydrogen trucking company Nikola pulled off earlier this year to go public and that EV startup Fisker is currently trying to execute. It’s also the latest to cash in on a sudden funding frenzy in the electric vehicle startup space, which has seen fresh money go to Karma Automotive, China’s Li Auto and XPeng, and others.
The deal is expected to close in the fourth quarter of 2020 and would provide Lordstown Motors with around $675 million in funding — more than the $450 million that CEO Steve Burns told The Verge he felt was needed to get the Endurance into production by the middle of 2021.
Revealed in June, the Endurance is a full-size electric pickup truck with about 250 miles of range. One of the truck’s standout features is that it is powered by four electric hub motors, with one in each wheel (as opposed to placing them on the axle). This makes it possible to precisely deliver differing amounts of torque to each wheel, which helps in tough driving conditions. The truck will start at $52,500.
Lordstown Motors is entering what is shaping up to be a highly competitive slice of the EV market, with electric pickup trucks coming from Tesla, Ford, GM, Rivian, and Nikola. Burns said at the Endurance unveiling that his startup is “going to beat everyone to market,” though, and believes Lordstown Motors has an advantage in focusing on making purpose-built work trucks and selling them only to fleets. The startup also has a leg up on most others, in that it already has a factory: the Lordstown, Ohio, plant that used to be occupied by GM.
Burns has a history of developing vehicles for commercial fleets, as he previously ran fellow electric vehicle startup Workhorse. Lordstown Motors was more or less spun out of Workhorse last year. After GM closed the Lordstown factory, it was under pressure from the Trump administration to find a buyer. Workhorse had spent years developing a pickup truck alongside its commercial electric trucks and vans, but it languished as sales dried up and a bid for the next-generation United States Postal Service vehicle stalled.
In May 2019, Trump tweeted surprising, puzzling news: GM CEO Mary Barra had informed him that her company was selling the plant to Workhorse. Despite never being profitable and surviving mostly on a series of lifelines from hedge funds, Trump said this was “GREAT NEWS FOR OHIO!”
But Workhorse didn’t buy the plant. Instead, Burns (who had left Workhorse) started Lordstown Motors, which reportedly borrowed $40 million from GM to buy the factory. Workhorse sold the intellectual property for its pickup truck 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 percent on every Endurance truck sold (for the first 200,000) and 1 percent of any debt or equity financing — meaning Burns’ old startup also stands to benefit from Lordstown Motors going public.
Lordstown Motors’ ties to GM didn’t stop at the factory loan. GM is investing $75 million in the go-public transaction and gets a seat on the startup’s board of directors — though just $25 million of that is cash, according to an investor presentation filed with the Securities and Exchange Commission. The other $50 million comes in the form of “plant assets,” “plant permits,” and operating costs at the factory that GM has covered since Lordstown Motors took over in November 2019. Lordstown Motors will use “GM components” in the Endurance, as the Detroit automaker is hooking the startup into its Tier 1 supply chain.
While GM has its own electric pickups on the way in the form of a Hummer truck and a full-size Chevy model, the company did recently try to invest in another EV startup: Rivian. But GM was ultimately spurned by the startup after trying to negotiate an exclusive deal. Rivian wound 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 tweet about the factory sale, Vice President Mike Pence appeared at the Endurance unveiling. So did Department of Energy head Dan Brouillette. That could come in handy, as Lordstown Motors says it is a “candidate” for a roughly $250 million loan from the DOE’s Advanced Technology Vehicles Manufacturing (ATVM) program — the same program that helped put Tesla on the map a decade ago. The DOE hasn’t given out an ATVM loan in years, and the Trump administration has proposed killing it altogether. But it helps to have friends in high places, especially in this administration.
With both pickup truck and electric vehicle sales trending upward in the US, Lordstown Motors believes it can 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 expects to be able to make about 31,000 trucks in 2022, with production more or less doubling each year after that. The startup also says there is “potential to enter the SUV market over time.”