The closed General Motors plant in Lordstown, Ohio, which is central to the company's tension with President Trump, has a new owner: a startup for electric vehicles called Lordstown Motors. The deal – which was surprisingly announced by Trump on Twitter in May – was completed on Thursday. Conditions were not disclosed.
The deal can bring hundreds, maybe thousands, of jobs back to the area, and GM says the new purpose of the factory will help establish Ohio as a hub for EV production. (The automaker itself is looking for investments in a nearby factory to transform it into a battery-making factory.) But the Lordstown factory is now in the hands of a small company trying to do what almost no other startup has have been able to do: build a completely new American automaker from (almost) the basics.
For clarity's sake, Lordstown Motors is a new company specifically established to purchase the Lordstown plant. It was made by Steve Burns, the founder and former CEO of Workhorse, a starting electric car. Workhorse has sold electric vans in the past and is looking for the contract for the construction of the next vehicle from the United States Postal Service. But the company has recently faced serious financial problems. The startup lost nearly $ 38 million in 2019 and generated just $ 4,258 in revenue last quarter. (Workhorse recently sold a drone company for $ 4 million and has approximately $ 9 million in cash.) It has largely survived due to a $ 35 million loan from Marathon Asset Management hedge fund.
The links between Workhorse and Lordstown Motors run deeper than Burns. Workhorse owns 10 percent of Lordstown Motors. His old company also grants an intellectual property license for the upcoming W-15 electric pickup truck to Lordstown Motors, and transfers the 6,000 preorders that it had collected for the truck to its new startup. In exchange, Workhorse receives a 1 percent commission on each of the first 200,000 trucks sold by Lordstown Motors, as well as 1 percent of all debts or equity financing that the new startup comes with.
Burns wants to build electric pick-up trucks for & # 39; business and government customers & # 39; according to The Wall Street Journal, and has already decided on the name of the first model of Lordstown Motors: Endurance. He said he wants to start production in about a year, but needs at least $ 300 million for that. He also said he plans to eventually reach the maximum capacity of 6 million square feet of the Lordstown plant, which would be around 500,000 vehicles per year – twice the number of Cruze GM sedans made at its peak , and more vehicles than Tesla currently makes after 15 years in business. Burns told the diary he plans to do this with trade unions, but his startup has not had any conversations with the United Automobile Workers, who had manned the plant before it was closed.
There is now a fairly long list of EV startups with an American presence who have tried to follow in the aftermath of Tesla. Most have failed, and the few who have not yet had to rely on government support. Perhaps the most famous copy, Faraday Future, has burned out around $ 2 billion and still has no car in production. Seres (born SF Motors) recently abandoned plans to enter the American market.
Byton is almost ready for production, but only after concluding a deal with the Chinese state automaker First Automotive Works (who drove out the co-founder and CEO of the startup). Lucid Motors is about to build a factory in Arizona after a $ 1 billion rescue from Saudi Arabia's sovereign wealth fund. China & # 39; s NIO has about 26,000 cars on the road, despite being only five years old, but that's because it signed a contract manufacturing agreement with – you guessed it – a Chinese state-owned company. (NIO also announced it earlier this year received an infusion of $ 1.45 billion of a state-run investment fund, although the deal has still not been closed.) At the same time, NIO has made several cuts to its US workforce and closed an office in Silicon Valley.
One notable example is Rivian, an EV startup who waited his time and waited for a lot of work – securing a production facility, locking early financing rounds – before the electric pickup truck was unveiled and SUV at the end of last year. The Michigan-based startup has since caught Amazon and Ford as investors, with the former recently announcing an order for 100,000 trucks. Not surprisingly, Burns told it diary he would like to follow a similar approach when building Lordstown Motors.