General Motors Company Sells its Stake in Lordstown Motors and Leaves The Electric Truck Manufacturer!
General Motors Co. acknowledged Tuesday that it has sold a small stake in Lordstown Motors Corp., a troubled electric car startup.
According to GM spokesman Jim Cain, the Detroit manufacturer sold 7.5 million Class A common stock shares, or less than 5% of the firm, in the fourth quarter.
After GM shuttered the Lordstown Assembly facility in northeast Ohio after more than 50 years of manufacturing, Lordstown Motors, under new ownership, bought it in 2019. Lordstown Motors received $75 million in cash and in-kind donations from GM.
According to Cain, GM’s contribution was made “to smooth the sale of the factory” so that production could resume.
However, Lordstown has yet to begin mass manufacturing its Endurance electric vehicle. Last year, the firm received a storm of negative press after the CEO and founder, Steve Burns, was forced to resign due to a damning report from a short seller.
Although a new CEO has been appointed, the company’s shares fell 20% to $2.53 per share on Monday after executives revealed an uninspiring projection for truck deliveries, which is contingent on obtaining more funds and executing a collaboration deal with the manufacturer Foxconn.
During a conference call with investors, Lordstown officials indicated they were still working on an agreement with Foxconn, which acquired the northeast Ohio facility for $230 million last autumn.
Commercial manufacturing is expected to begin in the third quarter of this year, with 500 units sold in 2022, according to Lordstown.
According to the corporation, production will increase to 2,500 vehicles by 2023.
Another EV startup that went public through a SPAC is Lordstown Motors. Burns’ departure came after Hindenburg Research, the short seller whose research prompted Burns’ departure, accused the firm of tricking investors with “mostly fictional and utilized as a prop to acquire funds and give credibility” pre-orders. The company admitted receiving two subpoenas from the Securities and Exchange Commission last summer, as well as the fact that prosecutors in New York had initiated an investigation.
