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Home / Business / GM sells the factory in Lordstown to the offshoot of a flagging EV startup

GM sells the factory in Lordstown to the offshoot of a flagging EV startup



General Motors' closed factory in Lordstown, Ohio, which was at the center of the company's tensions with President Trump, has a new owner: an electric vehicle startup named Lordstown Motors. The deal, which Trump unexpectedly announced on Twitter in May, was closed on Thursday. The conditions were not disclosed.

The deal could bring hundreds, maybe thousands, of jobs back to the region. According to GM, the new purpose of the factory will help to establish Ohio as a hub for the production of electric vehicles. (The automaker plans to invest in a nearby facility to turn it into a battery manufacturing facility.) The Lordstown plant is now in the hands of a small company trying to do what few other start-ups have able to build (almost) from scratch) a completely new American automaker.

It is clear that Lordstown Motors is a new company founded specifically for the Lordstown plant. It was created by Steve Burns, the founder and former CEO of the weakening startup Workhorse for Electric Vehicles. Workhorse has sold electric vans in the past and is currently battling for the contract to build the next generation vehicle of the United States Postal Service. But the company has recently been in financial distress. The start-up lost nearly $ 38 million in 201

9 and only generated $ 4,258 in the past quarter. (Workhorse has recently sold an emerging drone business for $ 4 million and has a cash volume of approximately $ 9 million.) The company has largely survived through a $ 35 million loan from Hedge Fund Marathon Asset Management.

The connections between Workhorse and Lordstown Motors are deeper than Burns. Workhorse owns 10 percent of Lordstown Motors. His old company is also licensing the intellectual property of his upcoming W-15 electric pickup to Lordstown Motors and is transferring the 6,000 pre-orders he has collected for the truck to his new startup. In return, Workhorse receives a commission of 1 percent for each of the first 200,000 lorries sold by Lordstown Motors and 1 percent of the debt or equity financing that the new startup has.

Burns wants to build electric pickups For "Business and Government Customers," according to the Wall Street Journal and has already chosen the name of Lordstown Motors' first model: Endurance. He said he wanted to start production in about a year, but needed at least $ 300 million. He also said that he intends to reach the maximum capacity of the Lordstown plant of 6 million square feet, which would equal approximately 500,000 vehicles a year – twice the number of Cruze sedans that GM manufactures there at peak times, and more vehicles, as Tesla is currently producing in the business after 15 years. Burns told Journal that he wanted to do this with a union staff, but that his startup had not yet had talks with the United Automobile Workers who occupied the factory before it closed.

There is now a fairly long list of EV startups with American presence who have tried to follow Tesla's trail. Most have failed and the few who did not rely on government bailouts. Perhaps the most famous example, Faraday Future, has cost around two billion dollars and still has no car in production. Seres (born SF Motors) has recently abandoned plans to enter the US market.

Byton is almost ready for production, but only after he has signed a contract with the Chinese state-owned automaker First Automotive Works (which sold the co-founder and CEO of the startup). Lucid Motors is in the process of setting up a factory in Arizona after Saudi Arabia's sovereign wealth fund has saved $ 1 billion. China's NIO has about 26,000 cars on the road, although it's only five years old, but that's because it has a contract with a Chinese state-owned automaker – you guessed it. (NIO announced earlier this year that a state-owned investment fund will provide $ 1.45 billion, but the deal is ongoing.) At the same time, NIO has made several job cuts in the US and closed an office in Silicon Valley.

An example that stands out is Rivian, an EV startup that has taken the time to wait until it has done a lot of hard work – securing a manufacturing facility and blocking early financing rounds – out of the way Unveiling its electric pickup truck and SUV late last year. The Michigan-based start-up has since brought Amazon and Ford as investors, with the former recently announcing an order for 100,000 trucks. Not surprisingly, Burns told Journal that he would like to pursue a similar approach to building Lordstown Motors.


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