Automotive manufacturer General Motors (GM) divested its stake in US-based electric pickup truck developer Lordstown Motors in late 2021, Detroit Free Press reported yesterday.
Founded in 2019, Lordstown is developing all-wheel-drive electric trucks under the Endurance brand that will be equipped with separate hub motors on each wheel, reducing the number of moving parts involved.
The corporate paid $75m for 7.5 million shares in Lordstown equating to a stake sized at under 5%, in February 2021, as part of the latter’s reverse takeover deal with special purpose acquisition company DiamondPeak Holdings.
The reverse takeover gave the merged company a pro forma valuation of $1.6bn and a listing on the Nasdaq Stock Exchange.
The company had already bought GM’s Lordstown Complex manufacturing plant in 2019, with the carmaker lending $40m to help offset a considerable amount of the purchase. It wrote off the mortgage associated with the facility in the wake of its equity investment.
Lordstown said on Monday it intends to manufacture and sell up to 3,000 Endurance commercial vehicles – which were first set to launch by late 2020 – through 2023, 500 of which are planned for this year.
Both figures represent a much lower amount than the company’s former management team had promised investors prior to the reverse merger. It also booked an $81.2m net loss in the fourth quarter of 2021, up from $38m in Q4 2020. Its full-year loss in 2021 stood at $410m against $102m the previous year.
GM spokesperson Jim Cain did not elaborate on the details of the open market sale or the amount it secured from its shares. He told CNBC: “Our objective in investing was to allow [Lordstown] to complete the purchase of the plant and restart production.”
Lordstown reportedly agreed to sell the plant to China-headquartered contract electronics manufacturer Foxconn for $230m in November 2021, with Foxconn supplying $50m in equity funding.
Adam Kroll, chief financial officer of Lordstown, told Detroit Free Press that Foxconn has already injected $200m into the company, though the sale has yet to be finalised, but that it will require another $250m more in funding to be financially viable in the long term.
Lordstown is also in talks with GM and Foxconn over a joint electric vehicle (EV) development agreement which would be a significant element in its future success, according to chief executive Dan Ninivaggi.
GM initially invested in Lordstown because the latter had agreed to sell the EV regulatory credits it got from production of the Endurance for its first three years, for 75% of its fair market price, enabling the corporate to sell its petrol-fuelled lorries and sports utility vehicles while meeting environmental regulations.
GM had agreed to invest $2bn in Nikola, another Nasdaq-listed company operating in the same space, in September 2020 for similar reasons only to drop the plans two months later.
Photo courtesy of Lordstown Motors Corporation.
