Electric Truck Startup Lordstown Motors to go Public in Blank-Check Reverse Merger Deal

author: Eric Walz   

The Lordstown Motors Endurance Pickup is aimed at commercial customers.

Electric truck startup Lordstown Motors has agreed to go public in a deal with blank-check company Diamond Peak Holdings. The deal is expected to close in the fourth quarter this year.

The deal values the electric truck start-up at $1.6 billion, the companies announced on Monday.

The new company will be called Lordstown Motors Corp following the closure of the deal in the fourth quarter. The stock will trade on the Nasdaq under the ticker symbol "RIDE," the companies said.

Lordstown expects to receive roughly $675 million of gross proceeds from the deal, which will be used for the production of its first electric truck called the Endurance. To date, the company said it secured $1.4 billion worth of pre-orders for its truck. 

The fully-electric Endurance designed for commercial customers, a market segment currently dominated by the gas-powered models including the Ford F-Series pickups and trucks from General Motors and its truck division GMC. 

Lordstown Motors was aiming to be the first American company to launch an electric pickup truck. However other battery-powered trucks are in the works from Tesla, General Motors, as well as new startups Nikola Motor and Rivian.

Last year, Lordstown Motors hired Rich Schmidt, a former director of manufacturing at Tesla Inc, as its chief production officer.

The Lordstown Endurance electric truck has some unique design elements to better serve commercial customers. Unlike most vehicles, including Tesla's vehicles, that use an axle shaft connected to the powertrain to transfer torque to the wheels, Lordstown designed the Endurance with in-wheel electric motors.

In May, Lordstown Motors announced an exclusive licensing deal with Elaphe Propulsion Technologies, a developer of in-wheel electric motors. Elaphe is a Ljubljana, Slovenia-based developer of high-tech propulsion technology. The company is supplying its Model L-1500 Endurance In-Wheel Motor for the Endurance.

Lordstown said the battery-powered Endurance gets the gasoline equivalent of 75 mpg.

"While most vehicle manufacturers are focusing merely on catching up and competing with legacy electric powertrain technologies pioneered decades ago by pure-EV OEMs, Lordstown is making a giant leap forward by building its vehicles around the needs of their users and not around the traditional powertrain-integration-imposed tradeoffs," said Gorazd Lampič, Elaphe CEO in May. 

Production of the Endurance is expected to begin the second half of 2021, at the company's factory in Lordstown, Ohio that was formerly owned by General Motors. GM closed the facility last year as part of a company-wide restructuring plan to cut costs, which included discontinuing the Chevy Cruze sedan that was built there. GM assisted Lordstown with $40 million in financing to help purchase the shuttered facility and convert it to produce electric vehicles. 

Earlier this year, Lordstown Motors was seeking an additional $200 million loan from a U.S. Energy Department program to further ready the factory for production of the Endurance.

The Endurance will have an electric driving range of 250 miles and a price tag of $45,000 net of a federal tax credit, Lordstown CEO Steve Burns said on a call. In February, Lordstown received its first large order for the Endurance. Electric utility company FirstEnergy has agreed to buy 250 of them to add to its fleet.

"Lordstown has a transformational product and business plan in what are two of the most valuable areas of focus and tremendous opportunity in the auto sector - electric vehicles and light duty trucks," DiamondPeak Chief Executive David Hamamoto said on Monday. "Lordstown has attracted a clear lane of customers in the commercial fleet segment of the market."

The reverse merger deal sought by Lordstown Motors is the same as rival hydrogen-electric truck maker Nikola Motor Company entered into to launch its IPO in June. It's typically used by startups to attract new funding on the stock market.

A blank check company is generally referred to as a "special purpose acquisition company" (SPAC), which is formed in order to raise funds via an IPO to finance a merger or acquisition. The funds are held escrow until a combination transaction closes. However, if no acquisition is made within 24 months, the SPAC is dissolved and funds are returned to investors. 

The deal includes a $75 million investment from General Motors and institutional investors Fidelity Management and Research Company LLC, Wellington Management Company LLP, Federated Hermes Kaufmann Small Cap Fund, and funds managed by BlackRock, Lordstown said.

Shares of DiamondPeak soared 29% to $13.20 in pre-market trading after the merger was announced. As of Monday afternoon, the stock was up 16% trading at $11.92. 

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.