General Motors has reached a deal to sell its Lordstown manufacturing facility to electric vehicle startup Lordstown Motors Corp. The company plans to begin building the Endurance electric pickup truck in 2020 and locate its headquarters at the plant.
Lordstown Motors Corp. is a private entity founded by Steve Burns, former CEO at Workhorse Group Inc. A technology company focused on providing sustainable and cost-effective electric-mobility solutions to the transportation sector, Workhorse has entered into an intellectual property licensing agreement with LMC.
"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," Workhorse CEO Duane Hughes said in a statement. "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."
Burns, now the CEO at LMC, 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."
GM also released a statement: “GM is committed to future investment and job growth in Ohio and we believe LMC’s plan to launch the Endurance electric pickup has the potential to create a significant number of jobs and help the Lordstown area grow into a manufacturing hub for electrification.”
Under the terms of the agreement, 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.