GM offloaded one of its EV assets, leading to the abandonment of some of its future EV plans.
General Motors is selling its stake in Lordstown Motors. The sale of the embattled electric vehicle startup was made during the fourth quarter of 2021 following an undisclosed lock-up period. In 2019, the smaller company, which was under different leadership at the time, purchased an old GM assembly plant in North East Ohio. The move came after GM closed its doors in that location after more than 50 years of production.
Following the purchase, GM invested $75 million in Lordstown Motors in cash and in-kind contributions. This meant GM owned 7.5 million common stock shares in the company (which is less than 5%) with an initial equity value of $75 million. Speaking to The Detroit News, GM spokesman Jim Cain said the investment was meant to facilitate the sale of the plant and to help restart production in Ohio.
According to CNBC, Lordstown began work on preproduction models of its first all-electric pickup truck called the Endurance. Addressing investors during a conference call, executives said they expect commercial production to begin in the third quarter this year with 500 sales slated for 2022. Despite GM selling their stake in the company, Lordstown Motors says production will grow to as many as 2,500 trucks by 2023.
To rectify their financial struggles, Lordstown announced a deal with iPhone maker Foxconn to purchase the former GM plant for $230 million last September. The deal includes Foxconn, which is formally known as Hon Hai Technology Group, handling the production of the Endurance pickup truck. While the deal is being finalized, executives are also in negotiations for the companies to partner on vehicle development in the future. Lordstown CEO Dan Ninivaggi described the deal as a critical component to the future success of the company.
The GM sale wasn’t completely unexpected, especially since Lordstown was hit with a series of bad headlines last year. The company’s reputation took a hit after a scathing report from a short seller forced the CEO and founder to exit the company. As reported by The Verge, Steve Burns was asked to leave after he was caught faking important truck preorders. As such, initial production goals were slashed and federal officers launched an investigation into the company.
Meanwhile, GM lost its bid to avoid recalling approximately 727,000 small SUVs in the United States whose headlights are so bright, they cause a visually impairing glare for oncoming drivers. ABC News says, the Detroit automaker petitioned the National Highway Traffic Safety Administration asking to avoid a recall in 2019. At the time the company said the problem didn’t affect safety for surrounding vehicles. The petition covered GMC Terrain SUVs from the 2010 through 2017 model years.
But the agency declined the request on the Federal Register website this week. GM said they will review the decision and decide on their next move. The car manufacturer insists that the lights meet industry standards and only received one complaint from a customer about brightness. However, the company will probably have to carry out the recall to comply with federal safety regulations.