Lordstown Motors Pursues Service Partnerships for Endurance
LORDSTOWN, Ohio – Despite an electric vehicle segment that is growing increasingly crowded with new product announcements from legacy automakers, startup Lordstown Motors Corp. believes demand will outpace supply over the next several years and allow plenty of room in the market for newcomers.
The priority for Lordstown Motors over the next seven months is to launch the all-electric Endurance pickup, the company’s first vehicle.
Part of the challenge, however, is to secure partnerships with third-party suppliers and service companies able to support future sales of the Endurance.
“We believe the market will be underserved for the foreseeable future and will continue to grow,” CEO Daniel Ninivaggi told analysts on a conference call Monday. “We believe that demand will be particularly strong among commercial fleet customers, given their focus on total cost of ownership and specific work requirements.”
Initially, Lordstown Motors will target a select number of fleet customers with which it says stand the best chance of developing a long-term relationship.
“We’ll undertake limited production this year,” Nanivaggi said, noting commercial deliveries are projected to begin during the third quarter of 2022. The company expects to produce just 500 vehicles this year and just 2,500 in 2023.
News of the Endurance’s limited production schedules sent shares of Lordstown Motors spiraling downward nearly 20% on Monday, closing at $2.57 per share.
A major part of the EV manufacturer’s plan is to secure a post-sales service and support partner, Ninivaggi said.
“We’re continuing to work with Cox Automotive,” the CEO said. “Cox Automotive Service marketplace has more than 6,000 service centers, 3,000 partner locations and 800 mobile technicians nationwide.”
According to a regulatory filing submitted Monday, Lordstown Motors said it has signed a memorandum of understanding with Cox. Under the MOU, Cox would “provide service and support to all Lordstown Motors EV fleet customers.”
Should a definitive agreement be reached, Cox would deliver services such as preventive scheduled maintenance, vehicle pickup and delivery, battery servicing, vehicle and collision repairs and roadside assistance. “This relationship is expected to position us to meet our customer needs after they take delivery of our vehicles,” according to the filing.
In December 2020, Lordstown Motors, then under the leadership of founder and former CEO Steve Burns, announced a partnership with Camping World Inc. Under the proposed deal, Camping World would use its nationwide network to provide service, maintenance and roadside assistance for the Endurance.
There was also talk about collaboration toward developing the first all-electric RV, but no deal was ever signed.
Camping World announced it had ended its association with Lordstown Motors in June of 2021, just days after the resignations of Burns and Julio Rodriguez, Lordstown Motors’ ex-chief financial officer. An internal inquiry found that company executives had exaggerated claims of preorders for the Endurance.
“We are launching electric world with an amazing assortment from around the globe,” Camping World CEO Marcus Lemonis announced on Twitter June 18, 2021. “Lordstown Motors will not be part of that.”
Lordstown Motors has also established Lordstown EV Sales LLC, based in Irvine, Calif., according to regulatory documents. The division is able to receive direct orders from customers and was awarded a dealership license in California.
Unlike other automakers, Lordstown Motors does not have a dealer network. Lordstown Motors would need an exemption from Ohio’s dealership laws to allow Lordstown Motors to sell directly to customers in the state.
Lordstown Motors also late last year renewed a five-year agreement it has with General Motors that allows the EV startup to access “non-brand” GM parts including airbags, steering columns and steering wheels.
The deal required a pre-payment of $17.8 million from Lordstown Motors.
Lordstown Motors purchased GM’s former Lordstown Assembly plant in late 2019 for $20 million. GM has about a 4.5% equity stake in Lordstown Motors.
Simultaneously, Lordstown Motors is in negotiations with Taiwan-based Foxconn that calls for that company to purchase Lordstown’s plant for $230 million and act as a contract manufacturer for the Endurance and future products.
Much of Lordstown Motors’ plans hinge on this agreement, which would provide the company with use of Foxconn’s mobility-in-harmony, or MIH, open-source platform.
“The Foxconn partnership would unlock the full potential of the Lordstown plant by getting us to scale faster,” Ninivaggi said. The MIH platform, he said, provides smaller and more specialized original equipment manufacturers such as Lordstown to achieve “benefits of scale without being a large, fully integrated automaker,” he said.
A deal with Foxconn would also significantly reduce raw material, component and other costs over time, Ninivaggi said, emphasizing the tech giant’s purchasing power, global supply-chain network and logistics capabilities.
Moreover, Foxconn recently signed a contract manufacturing agreement with Fisker Inc., which intends to manufacture its electric Pear in Lordstown once the sale closes, expected April 30.
Fisker President Henrik Fisker said last week that the automaker has received more than 1,000 reservations for Pear and anticipates building 250,000 vehicles a year at the Lordstown plant. The vehicle won’t be unveiled until later in 2023, Fisker said.
However, a contract manufacturing agreement has yet to be finalized between Lordstown Motors and Foxconn. The sale of the plant to Foxconn is contingent on reaching a joint development deal.
Ninivaggi said on the conference call Monday he was “disappointed” that negotiations related to the contract manufacturing agreement haven’t moved as fast as he would have liked.
“The relationship with Foxconn is very positive and discussions are ongoing,” Ninivaggi said. “I’m hopeful that we’ll get there.”
Copyright 2024 The Business Journal, Youngstown, Ohio.
