Editor’s Note: UPDATES throughout with details from reveal
A commercial fleet-focused electric pickup from Lordstown Motors Corp. (LMC) is sold out for its first year – if the startup secures the $450 million needed to retool a former General Motors (NYSE: GM) car plant to make full-size trucks.
With Vice President Mike Pence in the front passenger seat, CEO Steve Burns drove the prototype Endurance onto a stage at a plant event Thursday. Pence and U.S. Secretary of Energy Dan Brouillette spoke at the event live-streamed on YouTube.
“I really think this is a pickup truck 2.0,” CEO Steve Burns told FreightWaves in a June 23 interview. “We think we’ve really struck a good balance between a conservative pickup truck outer and a really fantastic underneath. It drives like a sports car.”
Prototype to production
Moving from prototype to production is uncertain despite Burns’ optimism.
GM technically can cancel LMC’s $40 million mortgage and take back the plant at the end of August.
“GM has been pretty public. They’re not taking the plant back,” he said.
Burns made no reference to the status of fundraising on Thursday despite telling FreightWaves he would have an update. The company did announce 14,000 preorders at $52,500 each before tax credits.
.“We don’t feel like there’s any complications of losing the plant or anything like that,” Burns said. “We just want to get the funding so we can do the tooling and the reconfiguration of the plant and get through the crash testing and everything that has to happen to be a car company.”
Some reconfiguration is underway preparing for assembling full-size pickups where GM produced compact Chevrolet Cruze sedans until March 2019. At its peak, GM built 400,000 Cruzes a year on three shifts. LMC’s first-year goal is 20,000 Endurance trucks.
Burns is keeping the existing Lordstown footprint, anticipating higher production later while taking a deliberate approach to manufacturing now.
“We didn’t want to shrink anything and then later, when we’re trying to make 400,000 vehicles a year, say, ‘Man, I wish I wouldn’t have shrunk that.’”
Of the 2.8 million pickup trucks sold annually in the U.S., Burns estimates 600,000 are Class 1 work trucks weighing 6,000 pounds or less. LMC could produce that many Endurance trucks a year “if we’re fortunate to have [that] much demand.”
Another product could help use more of the plant. Burns won’t talk about the prospects of building the next-generation U.S. Post Service (USPS) delivery vehicle other than saying “fingers crossed.”
The USPS extended until July 14 a deadline for proposals for a $6.2 billion contract to build 180,000 delivery trucks, according to Trucks.com.
The Workhorse factor
Workhorse Group Inc. (NASDAQ: WKHS), where Burns was CEO until February 2019, is one of four finalists and has said It would subcontract LMC to build the trucks.
The Cincinnati, Ohio-based Workhorse licensed the technology for its W-15 electric pickup to LMC in exchange for a 10% ownership stake in the company and royalties on the first 200,000 trucks it builds. The same technology would underpin the postal vehicle if Workhorse is selected.
Hedge fund Formidable Asset Management LLC said in a June 19 research note the LMC stake could eventually be worth $1 billion to Workhorse.
Workhorse itself is focused on ramping up production of a composite body electric delivery van that can deploy a delivery drone, and has about 1,100 orders from UPS (NYSE: UPS) among others.
Between its own truck and the LMC activity, Workhorse is experiencing the biggest runup in its share price in its history, rising to $10 a share in intraday trading on June 24 from a closing price of $1.43 on March 31. Following the reveal, shares closed Thursday down about 2.5% at $8.28.
In a research note late Thursday, Cowen’s Jeffrey Osborne, one of few analysts with regular coverage of Workhorse, raised his target price to $11.50 a share, saying several catalysts, including its licensing deal with LMC, are favorable.
Asked whether he thought he was doing Workhorse more good now than when he ran the company, Burns said “it’s hard to know.
“But they do own 10% of us. I know it’s going to help them, what we’re producing, but if it’s helping them ahead of time, that’s great.”
LMC faces competition from well-capitalized startup Rivian to industry electric vehicle leader Tesla’s Cybertruck to startup Nikola Corp.’s hybrid battery electric Badger pickup with an optional fuel cell range extender. All are aimed at well-heeled buyers and expected to cost north of $60,000.
The Endurance occupies a niche where “It’s very difficult to get a lane you can call all your own,” Burns said.
“This is a full-size work truck, and it’s not coming out at luxury pricing,” he said. “A lot of new vehicles come out luxury first and then move into the middle range. Because we sell [to fleets], we have to come out at a very attractive price out of the gate.”
The improbable journey to the prototype reveal began a little more than a year ago when Burns approached GM about buying the massive 6.2 million-square-foot Lordstown assembly complex. The deal was signed in November 2019.
GM announced in late 2018 that it had no future product planned for the 56-year-old plant about 62 miles southeast of Cleveland. The plant’s future became a lightning rod for President Donald Trump, whose 2016 victory was partly because of support in northeast Ohio’s Mahoning Valley where he attracted a lot of union member votes.
Trump and presumptive Democratic nominee Joe Biden are in a virtual tie in Ohio just over four months before the November presidential election. Biden leads 46%-45%, according to a Quinnipiac University poll conducted June 18-22. The poll had a 2.9% margin of error.
Trump criticized GM CEO Mary Barra, saying she needed to assign new work to the Lordstown plant or find a buyer to preserve the jobs of United Auto Workers union members. A number of unions supported Trump four years ago.
Trump tweeted the sale of the plant before GM announced the deal, which included a $40 million mortgage for the plant and retooling.
Both Trump and Pence botched details in talking about the plant sale in 2019. In his remarks to LMC workers on Thursday, Pence said Trump “has been the best friend that automotive manufacturing has ever in the Oval Office.”
Biden’s campaign shot back in a statement that said in part: “Ohioans are familiar with the Trump Administration’s lies, broken promises, and betrayal – this is the same administration that told the people of Lordstown not to sell their homes because they were going to bring strong union jobs back to the Valley.”