General Motors is selling its stake in Lordstown Motors, an electric vehicle startup that has struggled to produce its first vehicle. GM owned 7.5 million shares, or less than 5 percent of the company, with an initial equity value of $75 million. The news was first reported by the Detroit Free Press.
The sale was made during the fourth quarter of 2021 following an undisclosed lock-up period. James Cain, a spokesperson for GM, confirmed the sale, while a spokesperson for Lordstown declined to comment.
The stock sale signals the beginning of the end of GM’s relationship with Lordstown. The company traces its origins to GM’s announcement in 2018 that it would be closing down its Lordstown factory. Then-President Donald Trump assailed GM over the decision, leading to the automaker’s decision to sell the plant to a struggling electric truck startup called Workhorse.
Instead, Workhorse’s founder and former CEO, Steve Burns, started a new company called Lordstown Motors with the plan to build electric pickup trucks. GM invested $75 million in the company, $25 million of which was cash, and another $50 million in the form of “plant assets,” “plant permits,” and operating costs at the factory.
Since buying it, Lordstown Motors has put about $240 million worth of work into getting the factory ready to build its electric pickup truck, the Endurance. It went public by merging with a special acquisition company, or SPAC, last summer — and has since run into problem after problem.
The CEO was forced out after he was caught lying about truck preorders. Initial production goals were slashed. And federal investigators launched probes, as the company revealed it only has enough money to survive through mid-2022.
With its financial struggles mounting, Lordstown announced last September that it would sell the former GM factory to iPhone assembler Foxconn for $230 million. The company later said it would loan out space from Foxconn while it searched for contract manufacturers to help with the production of the Endurance.
The news comes after Lordstown’s executives told investors this week they were looking to raise $250 million in order to build 500 Endurance electric trucks. They also cast doubt on the deal with Foxconn, disclosing that the factory deal was not as far along as anticipated.