GM sells Lordstown factory to the offshoot of a struggling EV startup

The closed Gen­er­al Motors fac­to­ry in Lord­stown, Ohio that’s been at the cen­ter of the com­pa­ny’s ten­sion with Pres­i­dent Trump has a new own­er: an elec­tric vehi­cle start­up called Lord­stown Motors. The deal — which was sur­prise announced by Trump on Twit­ter back in May — was final­ized Thurs­day. Terms were not dis­closed.

The deal could bring hun­dreds, maybe thou­sands of jobs back to the area, and GM says the fac­to­ry’s new pur­pose will help estab­lish Ohio as a hub for EV man­u­fac­tur­ing. (The automak­er is itself look­ing to invest in a near­by fac­to­ry in order to trans­form it into a -mak­ing facil­i­ty.) But the Lord­stown plant now rests in the hands of a small com­pa­ny that finds itself try­ing to do what almost no oth­er start­up has been able to do: build an entire­ly new automak­er from (almost) the ground up.

To be clear, Lord­stown Motors is a new com­pa­ny that was specif­i­cal­ly set up to buy the Lord­stown plant. It was cre­at­ed by Steve Burns, the and for­mer CEO of strug­gling elec­tric vehi­cle start­up Work­horse. Work­horse has sold elec­tric deliv­ery vans in the past, and is in the run­ning for the con­tract to build the Unit­ed States Postal Ser­vice’s next-gen­er­a­tion vehi­cle. But the com­pa­ny has recent­ly found itself in dire finan­cial straits. The start­up has lost near­ly $38 mil­lion in 2019, and gen­er­at­ed just $4,258 in sales this past quar­ter. (Work­horse recent­ly sold off a nascent drone for $4 mil­lion, and has around $9 mil­lion in cash.) It has sur­vived in large part because of a $35 mil­lion loan from hedge fund Marathon Asset Man­age­ment.

The ties between Work­horse and Lord­stown Motors run deep­er than Burns. Work­horse owns 10 per­cent of Lord­stown Motors. His old com­pa­ny is also licens­ing the intel­lec­tu­al prop­er­ty relat­ed to its impend­ing W‑15 elec­tric pick­up truck to Lord­stown Motors, and trans­fer­ring the 6,000 pre­orders it had col­lect­ed for the truck to his new start­up. In exchange, Work­horse will get a 1 per­cent com­mis­sion on each of the first 200,000 trucks sold by Lord­stown Motors, as well as 1 per­cent of any debt or equi­ty financ­ing the new start­up comes up with.

Burns wants to build elec­tric pick­up trucks for “busi­ness and gov­ern­ment cus­tomers,” accord­ing to The Wall Street Jour­nal, and has already decid­ed on the name of Lord­stown Motors’ first mod­el: Endurance. He said he wants to start pro­duc­tion in about a year, but needs at least $300 mil­lion to do so. He also said he intends to even­tu­al­ly reach the Lord­stown plan­t’s 6 mil­lion square max­i­mum capac­i­ty, which would be about 500,000 vehi­cles per year — dou­ble the num­ber of Cruze sedans GM made there at its peak, and more vehi­cles than Tes­la cur­rent­ly makes after 15 years in busi­ness. Burns told the Jour­nal he plans to do this with a union , but that his start­up has not yet had any dis­cus­sions with the Unit­ed Auto­mo­bile Work­ers, which staffed the plant before it closed.

There’s now a rather long list of EV star­tups with an Amer­i­can pres­ence that have tried to fol­low in Tes­la’s wake. have failed, and the few that haven’t have had to lean on gov­ern­ment bailouts. Per­haps the most famous exam­ple, Fara­day Future, burned through some $2 bil­lion and still does not have a car in pro­duc­tion. Seres (née SF Motors) recent­ly aban­doned plans to enter the US mar­ket.

Byton is near­ly ready for pro­duc­tion, but only after strik­ing a deal with Chi­nese state-owned automak­er First Auto­mo­tive Works (which drove out the star­tup’s co-founder and CEO). Lucid Motors is about to start build­ing a fac­to­ry in Ari­zona fol­low­ing a $1 bil­lion res­cue from Sau­di Ara­bi­a’s sov­er­eign wealth fund. ’s NIO has about 26,000 on the road despite being just five years old, but that’s because it struck a con­tract man­u­fac­tur­ing deal with — you guessed it — a Chi­nese state-owned automak­er. (NIO also announced ear­li­er this year that it was get­ting a $1.45 bil­lion infu­sion from a state-run invest­ment fund, though the deal has still not closed.) At the same time, NIO has made cuts to its US work­force and closed an office in Sil­i­con Val­ley.

One exam­ple that stands out is Riv­ian, an EV start­up that bid­ed its time and wait­ed until it had a lot of the hard work — secur­ing a man­u­fac­tur­ing facil­i­ty, lock­ing down ear­ly rounds of fund­ing — out of the way before unveil­ing its elec­tric pick­up truck and SUV last year. The Michi­gan-based start­up has since nabbed Ama­zon and Ford as investors, with the for­mer recent­ly announc­ing a 100,000-truck order. Unsur­pris­ing­ly, Burns told the Jour­nal he’d like to take a sim­i­lar approach to build­ing up Lord­stown Motors.

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