General Motors sold its stake in Lordstown Motors, an electric vehicle startup that has struggled to get its first vehicle, the electric pickup truck Endurance, to production, reports the Detroit Free Press.
GM’s 7.5 million shares of common stock, which was less than 5% of the company, had an initial equity value of $75 million. The automaker sold its stake in the fourth quarter of 2021 following an undisclosed lock-up period.
The news comes after Lordstown disclosed a widened loss of $81.2 million, or $0.42 per share, for the fourth quarter. During its earnings call on Monday, the startup shared plans to produce and sell up to only 3,000 Endurance trucks through 2023, with 500 of those expected to sell this year. That is, if the company raised more money. On Monday, Lordstown told investors it needed to raise another $250 million in order to build the 500 trucks.
The extra plea for money already doesn’t look great, but what’s more is that the updated guidance is far below the 32,000 units former management promised investors in the lead up to Lordstown’s public listing via a SPAC deal in October 2020.
Lordstown’s relationship with GM goes back to 2018 when GM said it would be closing down its Lordstown factory, which former President Donald Trump took issue with. GM then sold the plant to another toiling EV company, Workhorse (which, by the way, is still struggling per its own Q4 earnings that showed a quarterly loss of $1.13 per share).
Workhorse’s founder and former CEO, Steve Burns, started Lordstown Motors with plans to build electric trucks in the old GM factory, and GM invested $75 million in the company. Lordstown invested about $240 million into the factory, but wasn’t able to get it off the ground.
Following a series of dramas, including losing key leadership amidst production issues, Lordstown revealed it didn’t have enough cash to make it to 2023, so it sold the factory in September to iPhone assembler Foxconn for $230 million. However, the deal hasn’t closed yet, and Lordstown’s leadership said on Monday that the factory deal was not as far along as they expected, another announcement that undoubtedly caused investors to squirm in their seats.