Ohio's Lordstown Motors Goes Public In Search of That 'Next Tesla' Big Money
It's one step closer, but still a long way to go.
Lordstown Motors, the ambitious electric vehicle startup settling in the shadows of an old GM plant will soon become a publicly-traded company thanks to a merger with a special-purpose acquisition company.
The announcement of the acquisition became public on Monday, outlining a $1.6-billion implied equity merger agreement with DiamondPeak Holdings. A portion of the deal involves Lordstown Motors becoming a publicly-traded company under the aptly-named public ticker "RIDE", something which will hopefully aid in the interests of financial backers like General Motors, who has placed a $75-million bet on the company's future success to date. In total, institutional investors have pledged a total investment of $500 million.
General Motors has played a big part in Lordstown's success up until this point. In December, GM provided Lordstown with a $40-million mortgage so it could purchase and retool the automaker's decommissioned 6.2-million-square-foot assembly plant in Lordstown, Ohio where the Chevy Cruze was once built. GM has also invested $25 million in cash and $30 million in operational support to Lordstown Motors.
“We are thrilled with the opportunity to build Lordstown Motors into a top-tier electric truck company that is highly differentiated from the competition. We are uniquely positioned to be a leader in the industry, with our first vehicle, the revolutionary Lordstown Endurance," said Lordstown Motors CEO and Founder Steve Burns in a statement.
"Since its unveiling just over a month ago, the Endurance has been met with enthusiastic support, and to date, we have secured $1.4 billion of pre-orders. Our platform is rooted in sustainability, and the entire Lordstown team is committed to ensuring we contribute to a healthier planet for generations to come,” he added.
Burns' comment about the automaker being uniquely positioned is quite accurate. The acquisition of the former GM assembly plant in late 2019 placed the startup in a near-production ready facility that formerly employed more than 1,700 workers in the surrounding community. This gives Lordstown not only an advantage for manufacturing, but also for talent acquisition—something which has been a hot button topic with other electric automakers as of late.
But despite being set up with a competitive advantage, Lordstown still has a number of ladders to climb before it even enters the phase of production hell that is new auto manufacturing. One of the biggest on the list that is now more achievable is funding the production of the Endurance—its fleet-oriented $52,500 all-electric pickup. The automaker will use at least $675 million of the funds acquired through this deal for that purpose alone.
Another large takeaway from this deal is just how Lordstown is raising capital. Using Wall Street to create influxes of cash is an old business trick that is being used by many new automakers (some you've likely never even heard of) to build "the next Tesla." Tech firms have used this same strategy in the past, so rest assured that it's not all venture capitalists and sunshine powering the startups around Silicon Valley. Still, It's quite interesting to watch this same effect flow down to the automotive industry, especially as the line becomes blurred between "car" and "electronic appliance."
Lordstown says that it plans to begin production of the Endurance in the second half of 2021.
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