Anyone want to buy some stock in Lordstown Motors?
It wasn’t all that long ago electric vehicle startup Lordstown Motors was a media darling. After all, the upstart saved the 6.2-million-square-foot factory, seemingly injecting economic vitality into the northeastern Ohio city at a time when everything seemed to be in freefall. It became a symbol of how the green energy initiative would revitalize the US economy, rising from the supposed ashes of the oil industry.
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Only, things aren’t playing out according to the script. Lordstown Motors was dealt what could turn out to be a fatal blow on March 1 when it leaked that General Motors divested from the company. This actually happened back in the fourth quarter, with GM selling off its 7.5 million shares.
Lordstown went public back in October of 2020 amidst plenty of media fanfare. The initial equity value of GM’s shares was $75 million. In exchange, the auto giant provided in-kind contributions plus $25 million in cash.
On February 28, Lordstown Motors underwhelmed everyone by announcing it plants to build a mere 3,000 vehicles through next year, with 500 of those rolling off the factory line in 2022. Before the company went public, it was promising much more robust production figures. Understandably, investors aren’t happy about this anemic push into the market.
The first Lordstown model, the Endurance, is an all-electric pickup truck. Preproduction models have been rolling out of the facility with customer deliveries slated to begin in the third quarter of 2022.
Still, Lordstown Motors CEO Steve Burns believes in the company. During an older interview, he pointed out the Lordstown factory is a high-volume plant, stating he expects to be employing 4,000 to 5,000 soon. "We think the electric pickup is the new normal,” he said. With “well over several thousand” pre-orders for the Endurance, which starts at $52,500, some think the company still has legs, even without GM’s backing.
It’s arguable GM only invested in Lordstown Motors to recover its public image after many lashed out about the company shuttering the Lordstown Assembly Plant in 2019. We don’t know how much this has cost the company, but management might still consider the money well spent.
Sources: Detroit Free Press, CNBC