Lordstown Motors in ‘Serious Discussions’ with Other Manufacturers to Use Plant
LORDSTOWN, Ohio – Electric vehicle startup Lordstown Motors Corp. could end up sharing its sprawling manufacturing plant with multiple automakers in order to generate new revenue streams for the company.
“Serious discussions are now underway with several potential partners, and we expect that many more will become attracted to the potential of our factory,” Executive Chairwoman Angela Strand said during a company’s quarterly earnings call Wednesday. “This is a critical, strategic pivot for us.”
Strand said the 6.2 million-square-foot plant and 650 adjoining acres provides plenty of room for other manufacturers to produce components or vehicles at the site while Lordstown Motors builds the Endurance, an all-electric pickup that the company expects to launch in late September.
Lordstown Motors purchased the plant in November 2019 from General Motors, which produced automobiles there for more than 50 years. GM extended Lordstown Motors a $50 million line of credit so it could purchase and begin retooling the plant.
GM’s investment, plus another $25 million in cash, was converted into equity holdings in Lordstown Motors when that company went public in October. GM owns about a 4.5% stake in the EV startup.
Strand said the decision to market the plant’s assets to other manufacturers creates “significant new revenue opportunities for Lordstown.”
She noted that these partnerships could take the form of contract manufacturing opportunities, direct investments, subleasing space or other options.
“When we talk about strategic partnerships, they can also come with investments as well as financial investors,” Strand said.
Lordstown Motors President Rich Schmidt said the company’s operations take up about 30% of the plant, leaving “ample room for partners to build vehicles.” He also said there is a potential market to sell Lordstown’s battery pack, hub motor systems and chassis to other companies.
The plant’s battery pack line is now commissioned, while the hub motor manufacturing line is being installed.
“Because of our technology, we have no doubt we will be at the center of discussion from fleet customers and consumers,” Schmidt said.
The company said in its second quarter earnings report that it expects to begin limited production of the Endurance in late September and begin commercial deliveries of the pickup during the second quarter of 2022. It plans to receive validation and regulatory approval for the vehicle in December and in early 2022.
Strand said the Endurance would first be sold to fleet customers and then eventually into the consumer market.
“We’re hitting all of the major segments,” she said.
Lordstown Motors reported a net loss of $108 million for the three months ended June 30 and closed the quarter with $366 million in cash.
Strand said expenses have thus far exceeded initial projections, as most were consumed by hard tooling and research and development costs.
For the full 2021 year, the company projects capital expenditures to be between $375 million and $400 million, up from $250 million to $275 million, she said. At the end of the third quarter, the company expects its liquidity to be between $225 million and $275 million without any additional financing.
In July, Lordstown Motors announced it had secured an equity deal with a hedge fund managed by Yorkville Advisors that could extend as much as $400 million into the operation if necessary.
“The equity line gives us flexibility to access capital, and we’ll do so if needed while we also explore other financing and strategic options,” Strand said.
Shares of Lordstown Motors, which trades on Nasdaq under the symbol, RIDE, have come under pressure over the last several weeks. On Wednesday, RIDE’s share price closed at $5.58, down 37% over the last month.
Extended hours trading saw RIDE share prices bump upward to $6.06 per unit after Lordstown released its earnings numbers.
Meanwhile, the company is under scrutiny by the U.S. Securities and Exchange Commission and the U.S. Department of Justice, both of which have launched investigations into claims of preorders for the Endurance and the company’s merger with DiamondPeak Holdings Corp. Lordstown Motors reported Wednesday that it spent more than $15 million in legal and consulting fees, mostly because of the SEC investigation and an internal investigation the company conducted related to allegations that executives exaggerated the number of preorders for the Endurance.
The company was also impacted in June when it announced the abrupt resignations of CEO and founder Steve Burns and chief financial officer Julio Rodriguez. Strand was appointed Lordstown’s executive chairwoman, and Becky Roof its new CFO.
“Our strengthened leadership team has been in place for less than two months, and has fought to broaden our go-forward commercial strategy,” Strand said.
Copyright 2023 The Business Journal, Youngstown, Ohio.