GM to loan $40M to Lordstown Motors to help introduce electric truck
General Motors Co. sold its sprawling Lordstown, Ohio complex for $20 million — but it plans to cut the buyer a $40 million loan to help it launch its first product.
Lordstown Motors Corp., the start-up that swooped in to buy the Lordstown plant GM effectively idled in 2019, bought the plant in early November. Neither company offered details of the sale, which allows Lordstown Motors to establish its headquarters at the plant and build an electric pickup truck there.
But documents filed with the Trumbull County Auditor and the Trumbull County Recorder Dec. 5 offer outline details of the transaction.
An open-end mortgage agreement would have Lordstown borrow $40 million to support the purchase of the complex and to support Lordstown Motors' launch of its forthcoming electric pickup, the Endurance. That could increase to $50 million if needed, according to documents. In addition to purchasing the facility, Lordstown Motors would update and retool the plant for its production.
The transfer of the property — and Lordstown Motors initial fund-raising efforts — were delayed by a 40-day strike against GM by the United Auto Workers union. The loan from GM would effectively recuperate lost time for Lordstown Motors to keep the start-up on track for its 2020 launch.
GM spokesman Jim Cain said the automaker would not comment on terms of the sale, or the loan. Details from the public records were first reported by The Business Journal in Youngstown, Ohio.
The deal was structured to keep Lordstown Motors on its timeline, Cain said.
Meantime, GM has the option to repurchase the sprawling 6-million-square-foot complex. or lease portions of the Lordstown plant from Lordstown Motors, according to a memorandum of options signed by Lordstown Motors CEO Stephen Burns and GM Global Director of Real Estate, Debra Hoge.
There were no details in the documents filed Dec.5 on when the loan would be repaid. An open-end mortgage essentially allows the borrower to increase the amount of money borrowed at a later date.
Lordstown Motors plans to build trucks for commercial customers, including municipalities and utility companies in need of fleet vehicles. Production will start with a full-size pickup with a mid-size pickup to follow, and after that, an industrial utility vehicle. The Detroit News reported in August that Burns was trying to raise $300 million to support the conversion of the Lordstown plant.
The company plans to start production of its pickup in late 2020 and will initially hire 400 workers. Burns had formed another electric vehicle start-up, Workhorse Group Inc., which as of Sept. 30 had lost $37.8 million and had $10.2 million in cash, according to a filing with the U.S. Securities and Commission.
Workhorse owns 10% of Lordstown Motors. Burns plans to license components of Workhorse's electric-drive technology for the electric truck. Workhorse will transfer 6,000 existing pre-orders for its W-15 battery-powered pickup to Lordstown Motors.
GM announced last week plans to invest $2.3 billion in northeast Ohio with LG Chem to build a battery-cell plant there. That plant will go up in the area of the Lordstown Assembly plant.
The cells will be used in GM's all-new electric vehicles. GM plans to have 20 all-electric nameplates globally by 2023. One of those will be an all-new electric pickup truck coming in the fall of 2021.
Detroit News staff writer Kalea Hall contributed