Lordstown Motors to merge with acquisition company, go public
Detroit — Electric vehicle startup Lordstown Motors Corp. and DiamondPeak Holdings Corp. have entered into a $1.6 billion merger agreement that will result in Lordstown becoming publicly listed, the two companies said Monday.
Lordstown's merger with the special purpose acquisition company is viewed as a way to aid in the development of Lordstown’s all-electric pickup truck, the Endurance, which was unveiled in June.
The startup was pushing to raise $400 million to produce its truck and so far it has $500 million in investment, including $75 million from General Motors Co.
"We're going to hit our timing next year and come out with the first electric pickup truck in the world," Lordstown Motors Founder and CEO Steve Burns said.
Tesla Inc. and Plymouth-based Rivian Automotive are also developing electric trucks. Tesla's Cybertruck is slated for delivery in late 2021. Rivian's R1T is expected to go on sale in late 2020. GM and Ford Motor Co. are planning to join the battle. GM is debuting the GMC Hummer EV later this year and will start producing it in late 2021. A fully battery-electric edition of the Ford F-150 is expected within the next two years.
Lordstown's Endurance truck has an electric motor at each wheel, with no transmission or axles, making it easier to build and maintain. The automaker claims the $52,500 truck can go 250 miles on a full charge and get the equivalent of 75 miles per gallon.
The startup is targeting commercial and fleet customers like utility companies and municipalities to purchase its truck. It has received more than 27,000 pre-orders for the vehicle, which is more than $1.4 billion of potential revenue.
In its first year, Burns expects to be able to produce at least 20,000 trucks at the 6.2 million-square-foot assembly plant in Lordstown, Ohio, it purchased from GM last fall. The plant, where GM used to build Chevrolet cars, has the capacity to manufacture more than 600,000 vehicles.a year.
GM has invested $75 million in the company: $25 million in cash, the $20 million value of the plant and the equipment inside, and $30 million in operational support.
"GM is excited about the progress LMC has made because we believe production of the Endurance pickup will help create jobs in the Lordstown community," GM spokesman Jim Cain said in a statement.
Burns said the company "would not be this far without GM, that's for sure."
In addition to GM, Lordstown received investment from institutional investors, including Fidelity Management & Research Company LLC, Wellington Management Company LLP, Federated Hermes Kaufmann Small Cap Fund, and funds and accounts managed by BlackRock.
“We have evaluated hundreds of companies for more than a year and Lordstown stood out as a differentiated, high growth company at the confluence of electric vehicles and light-duty trucks, two highly valuable areas of focus and tremendous opportunity in the automotive sector," David Hamamoto, chairman and CEO of DiamondPeak, said in a statement.
When the transaction closes, which is likely to be in the fourth quarter, the combined company will be named Lordstown Motors Corp. and is expected to remain listed on the NASDAQ and trade under the new ticker symbol “RIDE.”
Shares of DiamondPeak stock were up nearly 16% Monday morning after the merger announcement.