GM finalizes sale of Lordstown plant to Workhorse-affiliated EV builder

Well, what do you know! It appears the historic Lordstown deal is going to happen after all. Lordstown Motors (LMC) has formally announced its acquisition of the former GM manufacturing complex in Lordstown, Ohio. LMC, a spin-off of Workhorse Group (NASDAQ: WKHS), plans to begin production of an electric pickup at the Lordstown plant starting in late 2020.

EV fans have been excited about the deal from the beginning,
but also more than a little skeptical, because of the
bizarre way in which the plan was first announced
, and because of doubts
that a small startup company would be able to muster the financial resources to
take over such a large manufacturing plant. Now it’s plain that the deal will
go forward, although significant aspects remain unclear.

Lordstown Motors and Workhorse are two separate companies.
However, Workhorse owns 10 percent of Lordstown, and former Workhorse CEO Steve
Burns is the new CEO of Lordstown. Lordstown will license components of
Workhorse’s electric drive technology, and will also take over 6,000 existing
pre-orders for Workhorse’s prototype W-15 pickup truck.

Burns told journalists that Lordstown has the money to buy
the plant, but “we are going to be fundraising for a while” in order to finance
retooling, development and homologation.

Workhorse is one of five bidders on a contract to provide
the US Postal Service’s next-generation delivery truck. The deal, which has
been under consideration for several years, would involve delivering as many as
180,000 trucks, and could be worth as much as $6.3 billion. A decision is
expected by the end of the year. The possibility of building the new trucks in
Lordstown has been raised, assuming that Workhorse wins the work.

Even without the USPS truck, if all goes well in Lordstown,
the deal will be a major electrification milestone, and a win for all
concerned. Consumers will get a badly needed electric pickup truck, the US auto
industry will get to hold on to a chunk of the EV industry, resisting the
magnetic pull of China, and at least some of GM’s workers will get a chance to
transition to new jobs with a future.

“We are committed to the people of Lordstown, we will locate
our headquarters in the Lordstown plant, and we plan to build the Endurance
pickup truck utilizing experienced workers who helped produce millions of
vehicles in this very same plant,” said LMC CEO Steve Burns.

“The quality and precision of the production robotics and
equipment in the Lordstown facility is evident,” said LMC Chief Production
Officer Rich Schmidt, who was formerly Director of Manufacturing at Tesla. “Our
team feels this is a factor to help us hit the ground running in building the Endurance
pickup truck.”

It’s obvious that GM has a big stake in making this venture
successful, but the nature of its financial commitment is unclear. The company has
discussed building a battery cell plant in the Lordstown area, which might
create about 1,000 jobs. “GM is committed to the future investment and job
growth in Ohio and we believe LMC’s plan to launch the Endurance electric
pickup has the potential to create a significant number of jobs and help the
Lordstown area grow into a manufacturing hub for electrification,” said the
automaker in a statement.

GM has said the LMC operation would create about 450 jobs, and “a person familiar with the plans” told the Detroit Free Press that these positions are likely to start at $17 an hour.

Reaction to the news from former Lordstown workers was mixed.
A few still seemed to be clinging to the hope that GM would restart production
of the retired Cruze sedan. However, union authorities sounded cautiously

“Nothing’s ever going to replace the 5,000 jobs in the GM
plant and all the spinoff jobs,” said Tim O’Hara, President of UAW Local 1112. “For
the Mahoning Valley, any job is a good job, but we don’t know what the jobs
will pay and how many will be offered. If these turn out to be union jobs, it’ll
be good for the valley from that aspect.”

Neither GM nor LMC has met with the union, nor have they yet
indicated when tooling, hiring and production would begin.

“If they’re going to be union represented, we’d like Local
1112 to be their bargaining agent when that time comes,” said O’Hara. “We don’t
want the local to go away and that was a fear of ours after the contract ended.”