Voltage Valley Brand Electrifies Hope
YOUNGSTOWN, Ohio — It’s been a whirlwind 12 months for the automotive industry in Lordstown. On March 6, 2019, the last Chevrolet Cruze rolled off the line at the General Motors assembly plant, ending 53 years of building cars there.
Two days shy of a year later, the automaker announced its plans to build 13 electric-powered vehicles, beginning with the Chevrolet Bolt this summer. Between now and 2025, GM will invest $25 billion in developing the vehicles, CEO Mary Barra said.
Of that, $2.3 billion will be spent in Lordstown in a joint venture with LG Chem to build batteries for those cars. Once the plant comes online – ground is slated to be broken this spring and is projected to start production in 2023 – it will provide all Ultima batteries used by the automaker’s electric-powered offerings. The plant is projected to employ 1,100.
In the meantime, Lordstown Motors purchased the former GM assembly plant for $20 million in December. The company borrowed $40 million from GM to finance the purchase and retooling of the plant to build the Endurance line of electric-powered pickup trucks. Lordstown Motors is also raising capital, aiming for $300 million by the end of March, chief operating officer John LaFleur said in late January.
While no figures for Lordstown Motors have been disclosed as of publication, another startup in the electric-vehicle sector, Rivian, has secured $2.85 billion in investments, including $1.3 billion from T. Rowe Price, $700 million from Amazon and $500 million from Ford Motor Co.
“They bought a shuttered Mitsubishi plant that had been closed for six years in Normal, Ill. It was gutted. They need the billions they’ve raised just to [rebuild] that,” said Lordstown Motors CEO Steve Burns at a tour of the plant March 5. “They’re targeting luxury adventurers; it’s a high-end offroading [SUV] like Land Rover. Our lane with work trucks is unique. With big companies like Ford investing, it raises the water level for everybody.”
If everything goes as planned for Lordstown Motors, producing 20,000 trucks by 2021 and ramping up to 100,000 by 2023, that level could rise for many more companies.
Like the GM Lordstown Assembly before it, Lordstown Motors could foster an ecosystem of suppliers around it. The company has adopted the slogan Voltage Valley. And it’s not alone in pushing the idea that the Mahoning Valley could become the epicenter of electric-powered vehicles.
At a March 5 public information session, a representative from GM said the Lordstown battery plant will be “ground zero” for the company’s electrification efforts.
“One thing that’s for sure is this proposed facility is very important to GM,” said spokesman Dan Flores. “The company’s committed more than $20 billion to bring more than 10 EVs to market. If anyone questioned GM’s commitment to an all-electric future, we hope we addressed that. We are absolutely committed and this proposed battery plant here is where it all starts.”
In late January, the automaker cohosted events with the Youngstown/Warren Regional Chamber to connect potential suppliers to the company, both for auto parts and supplies to the plant. The two events drew more than 500 companies combined, according to the chamber.
Discussions are happening every day with potential partners, chief operating officer LaFleur said, and “there’s no reason they won’t” eventually bring physical sites to the Mahoning Valley.
“Making 20,000 vehicles a year isn’t going to attract everybody. Tier one [suppliers] want volume,” he says. “When you hit that 100,000 mark, that’s when it turns into an interesting opportunity for suppliers.”
The company is exploring how it will use all six million square feet of the plant, LaFleur and chief production officer Rich Schmidt said, including potentially providing space to suppliers.
“It makes sense for us to have them in-house because it reduces the logistics costs, our inventory and the cost of materials. It also helps maintain the building and utility costs. It helps keep the vehicle costs down,” Schmidt said. “We want to use as much local as possible. We do have some components that will have steel and aluminum and polymers and rubber, so the closer a resource is from a supplier, the better for us, the lower the price and the better the quality. If we have quality issues, there’s quicker feedback. There’s less inventory to keep on hand and it’s less dunnage to keep those components separated.”
With Lordstown Motors relying on four moving parts in the Endurance – a motor to drive each wheel – the company relies on technology to keep its trucks up and running. That can open doors for startups housed at Brite Energy Innovators, says its president and CEO, Rick Stockburger. The incubator in downtown Warren is dedicated to fostering companies in energy and the Internet of Things, or IoT.
“Think about the electricity that’s flowing through sensors. And not just electricity, but also data. … Being able to utilize sensors that know when the right time is to put a certain amount of energy toward a motor, that’s IoT,” he says. “We once again have the chance to be at the forefront of new technology. We’re not making an educated guess here. GM is saying, ‘All of our vehicles by 2030 will be electric.’ We cannot pass up the fact that the internal combustion engine is not the future.”
If the area wants to regain its status as an industry leader, this is the technology to get behind, says U.S. Rep. Tim Ryan, D-13 Ohio.
“I think this is more realistic than most things that we’ve been part of,” he says of the potential to become Voltage Valley. “The fact that Lordstown Motors is out in the private markets raising substantial amounts of money. They’re in D.C. meeting with the Department of Energy on the loan program. General Motors is doing the battery plant and will be cutting the ribbon in the next month or two. Brite Energy has a battery testing lab and their facility is full.”
Still, there will be challenges in building out the technology. Established automakers like GM have found middling success in developing electrified vehicles that consumers want and breaking into the industry at all is a challenge for startups, says Bernard Swiecki, assistant director of research for the Center for Automotive Research.
When it comes to introducing vehicles that use electrical power, most have opted to retrofit existing models with hybrid motors.
“Part of being an automaker is having the full breadth of competence necessary to build an internal combustion engine. We’re talking about not just the engine itself, but the powertrain, the driveline component, the transmission,” Swiecki says. “When you go to electric, there are still elements of those things – apart from the engine – in the design, but you’re building a very different vehicle with fewer parts.
“There has been very little success in adapting existing vehicles to electrification. The approach that’s necessary is what GM announced: purpose-specific platforms,” he says.
For Lordstown Motors, Swiecki says, the challenge is even greater. It isn’t enough to build a vehicle that customers want. There’s a slew of tasks that automakers need to deal with beyond building cars.
“Even if you build that vehicle and design it and it’s successful, you still have very complex testing and certification you have to go through,” he says. “Then you need a distribution network of either sales or direct delivery like Tesla is doing. That’s a tremendously expensive undertaking. Then you need service parts, warranties, recalls and the ability to service every vehicle sold.”
From an economic development angle, the GM-LG Chem battery plant won’t be able to replace what was lost when Lordstown Assembly ended production. And while Lordstown Motors might get there, it will be a long road.
“Automotive assembly plants are the holy grail of economic development because of that multiplier you get from the supply base that has to be around the plant,” Swiecki says. “There are parts of that supply base that can come from anywhere in the world – simple, cheap components – but there are parts that have to come from nearby – seats, headliners. It’s that factor that makes them so valuable to the community.”
Lordstown Mayor Arno Hill says he’s not so much worried about the automotive ecosystem coming in. It’s the businesses that support the workers there that he wants to see.
“The spinoff we’d like to see is a restaurant or two, maybe a grocery store. You need foot traffic to provide amenities like a grocery store or a drug store,” he says, noting that the idea of Voltage Valley brings opportunities for new ideas and businesses.
“You have to look at the whole gamut and if you’re smart enough to look down the pike, you can find something,” he says.
One advantage that Lordstown Motors has is its position in the auto industry – if it can capture the imagination of buyers. It’s how Tesla found success, Swiecki says.
“If you can capture their imagination, consumers are willing to buy those vehicles from nontraditional automakers. The fact that you don’t have an established brand is not in itself an impediment,” he says.
It’s too early to tell if the Voltage Valley movement will be a success. Lordstown Motors won’t see its first truck come off the assembly until later this year at the earliest and it will likely be years before suppliers to the plant move here en masse. General Motors won’t start production of car batteries for three years.
And other cities are making their own inroads in electrification technology. Ford is developing a 1.2 million-acre campus in Detroit’s Corktown neighborhood to develop its technology, from electric power to automation. It’s a $740 million investment that’s expected to create 5,000 jobs, the automaker says.
In Phoenix, Ariz., startup Lucid Motors has broken ground on the first phase of a $300 million plant for its electric cars. Rivian is pouring hundreds of millions into its plant in Illinois. Tesla, meanwhile is looking for a site to build its own line of electric trucks, Cybertruck, in the Midwest and wants to build an East Coast plant for the Model Y.
But what’s important right now about the Voltage Valley movement, Stockburger says, is that it’s something to work toward.
“If we aren’t aspirational, we’re going to continue managing decline,” he says.
“No matter what the outcome is of Voltage Valley or America Makes or YBI, we’re already 10 steps forward. How do we take the next step? We need to make sure there’s a North Star that points us to the next step. In that sense, it’s a movement of small movements. It’s something to focus on while you’re marching.”
Pictured above: The CEO of Lordstown Motors, Steve Burns, says the company aims to build 100,000 electric trucks annually.
Note: This story appeared in our MidMarch 2020 issue, published March 16.
Copyright 2020 The Business Journal, Youngstown, Ohio.