GM is selling its stake in electric vehicle startup Lordstown Motors

General Motors is selling its stake in Lordstown Motors, an electric vehicle startup that has struggled to produce its first car. GM owns 7.5 million shares, or 5% of the company, with an initial equity value of $75 million. The news was first reported by Detroit Free Press.

The sale was made in Q4 2021 after an undisclosed lock-up period. James Cain, a spokesman for GM, confirmed the sale, while a spokesman for Lordstown declined to comment.

The stock sale signaled the beginning of the end of GM’s relationship with Lordstown. Company trace its roots to GM’s announcement in 2018 that it would close its Lordstown factory. President Donald Trump then attacked GM over the decision, which led to the automaker deciding to sell the plant to a struggling electric truck startup called Workhorse.

Instead, Workhorse founder and former CEO Steve Burns founded a new company called Lordstown Motors with plans to build electric pickup trucks. GM invested $75 million in the company, $25 million of which was cash and another $50 million in the form of “factory assets,” “factory licenses,” and in-house operating costs. machine.

Since buying it, Lordstown Motors has invested around $240 million to prepare the plant for the production of its electric pickup truck, the Endurance. It went go public by merging with a special acquisition companyor SPAC, last summer – and since then there’s been one issue after another.

The CEO was forced to resign after he was caught lying about the order in front of the truck. The original production target was cut. And federal investigators launch probeas the company revealed that they only have enough money to last until mid-2022.

With financial difficulties mounting, Lordstown announced last September that it would sell old GM factory to iPhone assembler Foxconn for $230 million. The company then said it would space loan from Foxconn while looking for contract manufacturers to help manufacture Endurance.

The news comes after Lordstown executives told investors this week they were looking $250 million fundraiser to produce 500 Endurance electric trucks. They also cast doubt on the deal with Foxconn, revealing that the factory deal did not go as far as anticipated. GM is selling its stake in electric vehicle startup Lordstown Motors

Chris Barrese

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