General Motors is selling its share in Lordstown Motors, an electric car company that has failed to develop a viable product. GM initially held 7.5 million shares, or less than 5% of the corporation, valued at $75 million. The Detroit Free Press broke the news first.
Following an unspecified lock-up period, the transaction occurred in the fourth quarter of 2021. GM spokeswoman James Cain acknowledged the transaction, but a Lordstown representative refused to comment.
The Impact of The Stock Deal
The stock deal effectively ends GM's affiliation with Lordstown. The startup was founded in response to General Motors' announcement in 2018 that it will close its Lordstown facility. Then-President Donald Trump chastised GM for the move, prompting the firm to sell the factory to Workhorse, a failing electric truck startup.
Rather than that, Workhorse's founder and former CEO, Steve Burns, founded a new firm named Lordstown Motors with the express purpose of manufacturing electric pickup trucks. GM spent $75 million in the firm, $25 million in cash, and the remaining $50 million in "plant assets," "plant licenses," and factory running expenses.
Since purchasing it, Lordstown Motors has invested over $240 million in preparing the facility to make its electric pickup truck, the Endurance. It went public last summer via a merger with a particular acquisition company, or SPAC — and has since fallen into an issue after issue.
The initial production targets have been lowered. The CEO was forced to resign when exposed to fabricating information on truck preorders. And federal officials started investigations when the corporation announced it barely had enough cash to go until mid-2022.
Lordstown said in September that it would sell the old General Motors facility to iPhone maker Foxconn for $230 million. Later, the business said it would borrow space from Foxconn while seeking contract manufacturers to assist with Endurance's manufacturing.
The announcement comes on the heels of Lordstown officials telling investors that they were seeking $250 million to manufacture 500 Endurance electric vehicles this week. Additionally, they doubted the Foxconn arrangement, revealing that the plant deal was not as far forward as hoped.
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