Lordstown Motors Eyes Profit, 100,000 Vehicles Annually by 2024
LORDSTOWN, Ohio – Fortified by an infusion of more than $600 million, Lordstown Motors Corp. projects it should break even or better in 2022 and realize a profit by 2024, its CEO said this morning.
Steve Burns told listeners on a conference call Monday that Lordstown Motors’ merger with DiamondPeak Holdings Corp. allows the automotive startup to realize its projection of selling more than 100,000 electric pickup trucks – named The Endurance – annually by 2024.
“The cash proceeds will be used to fund production of The Endurance,” Burns said. “We expect to achieve break even or better by 2022 — our first full year of production – and eclipse 10% by 2024.”
Burns noted that the company doesn’t expect any additional capital in order to attain profitability.
The Endurance is billed as the first all-electric pickup truck designed for the consumer and fleet market. The vehicle was unveiled June 25 at the company’s plant in Lordstown and has received preorders of approximately 27,000 trucks that accounts for $1.4 billion in revenue, Burns said.
The Endurance reduces costs for owners compared to traditional pickups, since there are fewer parts and thus requires less maintenance. Indeed, the vehicle boasts just four moving parts – four wheel-hub electric engines – versus more than 2,000 in a conventional pickup, Burns said.
Equipment testing and trials are under way at the plant, Burns said.
Earlier Monday, Lordstown Motors and DiamondPeak announced a merger with “an implied $1.6 billion pro forma equity value” that includes $675 million in funding for Lordstown Motors — $500 million of which is through PIPE, or private investment in public equity.
Among these investors is General Motors, which sold the Lordstown plant to the automotive startup for $20 million in November 2019. In order to complete the sale and begin retooling the plant, GM provided a $40 million line of credit to Lordstown Motors through a mortgage instrument.
Under the terms of the new deal, GM’s position includes in-kind investments already awarded to the company, such as the plant and equipment.
“GM is excited about the progress LMC has made because we believe production of the Endurance pickup will help create jobs in the Lordstown community,” GM spokesman Jim Cain said in a statement.
GM idled its Lordstown factory in March 2019 and officially closed the plant in October of that year. The 6.2-million square-foot complex in 2016 employed more than 4,000 workers and manufactured the Chevrolet Cruze,.
Burns said the facility has the capacity to manufacture 600,000 vehicles annually.
The combined company, which will continue to be named Lordstown Motors Corp., will be a registered subsidiary of DiamondPeak, according to filings with the U.S. Securities and Exchange Commission. The company will be listed on the Nasdaq index during the fourth quarter, Burns said, once the acquisition is complete. The company will be traded under the ticker symbol “RIDE.”
“We feel investors have the opportunity to buy into this company at a very compelling valuation,” said DiamondPeak CEO David Hamamoto. “The company has a transformational product and business plan in what are two valuable areas of focus in the automotive sector – electric vehicles and light-duty trucks.”
DiamondPeak, formed in Delaware in 2019, describes itself as a “special purpose acquisition company” that was established to effect mergers, acquisitions, stock exchanges, reorganizations and combinations.
Lordstown Mayor Arno Hill said that the merger bodes well for the company and the village. “This is exciting news,” he said. “It looks like they have the means to really start pushing.”
He said that village income tax revenues collapsed about 60% when GM shuttered the Lordstown plant. However, since the closure, GM has started work on a $2.3 billion electric-vehicle battery manufacturing plant, Ultium, on land next to the Lordstown complex. That plant is expected to initially employ about 1,100.
Also, Hill noted work continues on the TJX HomeGoods’ distribution center along Bailey Road, while construction is ongoing at Dominion Trucking’s new depot on Tod Avenue.
“There’s so much going on,” he said.
U.S. Rep. Tim Ryan, D-13, issued a statement that applauded the merger.
“I want to congratulate Steve Burns and the entire team at Lordstown Motors on this achievement and their continued investment in our community. I stand ready to continue to do everything in my power to support Lordstown Motors and put Voltage Valley on the map,” he said.
“Between the Lordstown Endurance, which when it rolls out in 2021 will be the first full-sized electric pickup truck on the road, the GM-LG Chem electric battery plant being built in Lordstown, and the amazing work being done at BRITE Energy Innovators, America Makes, and the Youngstown Business Incubator — our community is leading the jobs of the future.”
Copyright 2020 The Business Journal, Youngstown, Ohio.