General Motors sells its stake in Lordstown Motors, an electric vehicle startup struggling to produce its first vehicle. GM owned 7.5 million shares, or less than 5 percent of the company, with an initial equity value of $ 75 million. The news was first reported by Detroit Free Press.
The sale took place in the fourth quarter of 2021 after an undisclosed blocking period. A spokesman for GM’s Kane confirmed the sale, while a Lordstown spokesman declined to comment.
The sale of shares signals the beginning of the end of GM’s relationship with Lordstown. The company dates back to GM’s announcement in 2018 that it will close its Lordstown plant. Then-President Donald Trump attacked GM over a decision that led to the carmaker’s decision to sell the plant to an electric truck startup called Workhorse.
Instead, Steve Burns, the founder and former CEO of Workhorse, launched a new company called Lordstown Motors with the electric pickup plan. GM is investing $ 75 million in the company, $ 25 million in cash, and another $ 50 million in “factory assets,” “factory permits,” and factory operating costs.
After buying it, Lordstown Motors has invested about $ 240 million to prepare the plant to build its Endurance electric pickup. It went public through a merger with a special acquisition company or SPAC last summer – and has been facing problem after problem ever since.
The CEO was forced to leave after being caught lying about truck pre-orders. Initial production targets have been reduced. And federal investigators have launched investigations as the company revealed it only has enough money to survive until mid-2022.
With growing financial difficulties, Lordstown announced last September that it would sell the former GM plant to iPhone maker Foxconn for $ 230 million. The company later said it would lend space to Foxconn while looking for contractors to help with Endurance production.
The news comes after Lordstown executives told investors this week they wanted to raise $ 250 million to build 500 Endurance electric trucks. They also questioned the Foxconn deal, revealing that the factory deal was not as far away as expected.