Lordstown Motors Faces Hurdles Restarting GM Plant, Fighting Rivals

November 08, 2019 by Jerry Hirsch, @Jerryhirsch

The company acquiring General Motors’ Lordstown, Ohio, factory to build electric trucks faces stiff competition from far better-capitalized startups and mature automakers, even GM itself.

GM said Thursday that it completed the sale of the plant to Lordstown Motors Corp.

Headed by Steve Burns, the former founder and chief executive of the struggling Workhorse Group electric truck company, LMC plans to begin production of the Endurance pickup truck starting in late 2020.


It is licensing much of the technology from Workhorse, which designed the W-15 pickup truck and built prototypes but never advanced to production. Instead, the company is focusing on building electric delivery vans for UPS and others.

LMC said its agreement with Workhorse “provides the opportunity to transfer 6,000 existing pre-orders received by Workhorse for its W-15 prototype to LMC.”

Workhorse will receive a license fee equal to 1 percent of the gross sales price of each LMC truck sold, up to the first 200,000 units. It will get 4 percent for each of the first 6,000 trucks sold. Workhorse also has a 10 percent stake in LMC.


Trucks.com drove an early prototype of the electric W-15 truck in 2017. The short drive demonstrated that the vehicle had impressive power and the potential to become a dependable work truck. But there was far more engineering to be done. Typically there is much development between a demonstration prototype and a production vehicle.

LMC is pitching the Endurance as “the industry’s first all-electric pickup truck purpose-built for fleets.”

The pickup will utilize a 4-wheel-drive hub-motor system, LMC said. The design reduces the number of moving parts. LMC said this would reduce breakdowns and lower maintenance and operating expenses. Creating a low total cost of ownership – purchase price plus operating expense – is a crucial factor in winning fleet customers.

The truck will have onboard power export, allowing workers to operate power tools at a job site without a portable generator or leaving the vehicle running.


Others, including Tesla, Rivian, Ford and the Chevrolet division of GM, all have plans to build electric pickup trucks. Rivian already has an order for 100,000 electric delivery vans based on its truck platform from Amazon.com. Tesla plans to unveil the prototype for its pickup truck later this month.

“Developing an EV truck market is a long-term play, not necessarily about reaching volume in the first five years or more of production. But it is going to take time, and holding the course will take capital and patience,” said Stephanie Brinley, an analyst with IHS Markit.

Ford has a dominant position in the commercial-oriented pickup truck market and is unlikely to cede that, even in the developing electric segment. It also is a major investor in Rivian and has an agreement to use the startup’s platform for commercial vehicles.


A private company, LMC did not provide financial details for the factory purchase. It also declined to talk about its funding and cash position. Workhorse, Burns’ previous company, has never made a profit. The company said Friday that its third-quarter sales amounted to only $4,000. Workhorse also posted a loss of $11.5 million, more than double its loss in the same quarter a year earlier.

LMC “has a huge problem that Ford and Rivian don’t have, a lack of cash,” said Sam Abuelsamid, an analyst for Navigant Research.

Abuelsamid said LMC has the opportunity to win more work if Workhorse wins a competition to build the next U.S. Postal Service mail truck. The Postal Service said it plans to award a contract that could be worth $6 billion sometime next year. A team that includes Workhorse is one of the finalists. Workhorse could assign production to LMC.

GM also didn’t disclose the financial terms of the factory sale. But it was able to complete the deal after it settled a 40-day-week strike by the UAW. The auto union had to sign off on the transaction.


In a statement, GM said, “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.”

LMC expects to ramp up with about 400 employees, thousands less than GM’s employment at the factory. GM built the Cruze compact sedan at the site. But it closed the factory last year when it scuttled Cruze production to focus on assembling crossovers, SUVs and pickups at other factories.

“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,” Burns said.

LMC said it would begin talks with the UAW as it starts to look for workers.


One aspect of the startup’s strategy emulates moves successfully by both Tesla and Rivian. Tesla purchased a former Toyota factory in Fremont, Calif. to use as its manufacturing site. Rivian purchased an old Mitsubishi factory in Normal, Ill.

Like those plants, the 6.2 million-square-foot Lordstown factory is a fully-equipped automotive plant that has built millions of vehicles.

“The quality and precision of the production robotics and equipment in the Lordstown facility is evident,” said Rich Schmidt, chief production officer, Lordstown Motors. He is Telsa’s former director of manufacturing.

But getting it up to speed will be a challenge.

“Before Lordstown Motors can do anything, they will have to gut that plant and invest hundreds of millions of dollars in new tooling to assemble vehicles and presumably battery packs and motors. Today, they don’t have anywhere near enough even to get that process started,” Abuelsamid said.

Ryan ZumMallen May 8, 2019
A test drive in the Workhorse W-15 electric pickup revealed the future direction of the company now slated to partner with General Motors on production.

4 Responses

  1. Lkimura

    Earlier reports say Lordstown Motor Corp will be owned by Workhorse, GM and a third party. Workhorse says they receive only 10% of LMC through the licensing agreement for W-15 technology,that means 90% of LMC will be owned by GM and the third party. So it is possible that LMC could have access to a lot of additional funding, as well as engineering and manufacturing experience. The LMC association with GM could also bring valuable access to the GM dealer network for sales and service.

    • Jerry Hirsch
      Jerry Hirsch

      GM says it has now ownership position in LMC. So that is unlikely — Trucks.com


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