General Motors has sold its shuttered Lordstown Complex in Lordstown, Ohio to a start-up Lordstown Motors Corp., affiliated with Workhorse Group. The parties began talks about the deal since Spring 2019.
The purchase price was not disclosed but according to Reuters' sources, it was similar to what Rivian paid for a former Mitsubishi plant in Normal, Illinois ($16 million). GM is not investing in the Lordstown Motors project (founded by former Workhorse CEO Steve Burns).
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According to the press release, Lordstown Motors intends to use Workhorse's tech (Workhorse W-15) to produce electric pickup trucks. In exchange, Workhorse got an equity stake of 10% in Lordstown Motor and is entitled to a license fee (see details below).
Workhorse, on the other hand - as said several months ago - will focus on its light commercial vehicles. Before Workhorse suspended its W-15 project, it had some 6,000 pre-orders, which will be transferred to Lordstown Motors.
"Workhorse Group Inc. (NASDAQ: WKHS) ("Workhorse" or "the Company"), an American technology company focused on providing sustainable and cost-effective electric-mobility solutions to the transportation sector, has entered into an intellectual property licensing agreement ("IPLA") with Lordstown Motors Corp. ("LMC"), a private corporate entity founded by former Workhorse CEO Steve Burns.
The LMC entity was created in connection with, and for the purpose of, acquiring the General Motors ("GM") manufacturing facility located in Lordstown, Ohio. LMC intends to manufacture electric trucks in Lordstown.
Under the terms of the IPLA, Workhorse is granting LMC a three-year exclusive license of certain intellectual property relating to the Company's W-15 electric pickup truck in exchange for an initial equity stake of 10% in LMC, which will be anti-dilutive for two years. Going forward, Workhorse is entitled to a license fee equal to 1% of the gross sales price of each LMC truck sold, up to the first 200,000 units. LMC has agreed to pre-pay a portion of the license fee in an amount equal to 1% of the aggregate debt and equity commitments LMC intends to raise. Once the pre-payment has been amortized over actual production, LMC will pay on a per unit shipped basis up to the 200,000 unit cap. Workhorse will receive an additional 4% commission on the gross sales price of trucks sold which fulfill the 6,000 pre-orders for the W-15 transferred from the Company to LMC."
Lordstown Motors hopes to start production as early as the second half of 2020 using Lordstown Motors as a name on the vehicles.
"We’re expecting production to ramp up as early as the second half of 2020. In the meantime, we will be preparing the manufacturing plant for production while also working with the people of Lordstown to build a long-term plan for sustainability. Our seasoned group of automotive executives includes designers, engineers, manufacturers and thinkers of all kinds committed to the future of electric vehicles."
Reuters reports that Lordstown Motors "has retained Ohio investment bank Brown Gibbons Lang & Co and is working to raise additional capital".
The first model will be named "Endurance", but at the moment we don't know much about specs. The drawings look attractive though, and kind of resemble the Rivian R1T.
Gallery: Lordstown Motors Endurance
Workhorse CEO Duane Hughes said:
"This long-term partnership allows Workhorse to benefit by both monetizing our existing technology and participating in the upside potential of this new venture without prohibitively diluting our existing shareholders. Having an affiliated company with significant automotive production capacity also provides us with beneficial manufacturing footprint options in the future, should Workhorse win substantially larger contracts as we scale our operations. We also appreciate GM's acceptance of our combined proposal and believe it represents the best opportunity to keep production in Lordstown. We look forward to working together in the future as we finalize this transaction and explore additional production possibilities at the plant."
Lordstown Motors Corp. CEO Steve Burns added:
"Workhorse is the right technology partner for LMC, and this agreement ensures that both parties are positioned, and incentivized, to succeed. Under this structure, both Workhorse and LMC stand to benefit by blending Workhorse's technology with the production capacity of Lordstown Assembly. We, along with Workhorse, remain dedicated to keeping vehicle production in Lordstown. Now, with LMC's acquiring of the Lordstown, Ohio factory, it is time to begin executing on our plan."
Source: Workhorse Group, Lordstown Motors Corp, Reuters