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GM Selling Stake in EV Startup Lordstown Motors: Report

General Motors is selling its stake in Lordstown Motors, an electric vehicle startup. The EV startup has been struggling to produce its first vehicle.

GM owned 7.5 million shares, or less than 5% of the company. GM had an initial equity value of $75 million. The sale was made during the fourth quarter of 2021, after an undisclosed lock-up period. The sale was confirmed by GM spokesperson James Cain. However, a spokesperson for Lordstown Motors declined to comment on the sale.

This Is the End of GM’s Relationship With Lordstown Motors

By selling its shares of the EV startup, GM is effectively signaling that this is the beginning of the end of their relationship with Lordstown Motors. The company’s very beginning is tied to GM. Back in 2018, the automaker announced that it would be closing down its Lordstown factory. They got a lot of criticism over this decision. Thus, GM decided to sell the plant to a struggling electric truck startup called Workhorse.

Instead of moving Workhorse there, something else happened. The founder and former CEO of Workhorse, Steve Burns, started a new company. Thus, Lordstown Motors was created. And, just like Workhorse, the plan was to build electric pickup trucks. GM originally invested $75 million into the company. $25 million of that was in cash. The other $50 million was in plant assets, plant permits, and operating costs.

Since then, Lordstown Motors has put about $240 million worth of work into the factory. That’s all to get the factory ready for building electric pickups, of course. The EV startup went public last summer by merging with a special acquisition company (SPAC). Since then, they’ve run into countless problems

EV Startup Is Plagued With Problems

First off, the CEO was forced out of the company. He was caught lying about preorders for their electric pickup, called the Endurance. Then, initial production goals were slashed. And if that wasn’t enough, they had probes launched into their company by federal investigators. The results were not good. It was revealed that Lordstown Motors only had enough money to survive through mid-2022.

Due to these financial issues, the EV startup announced that it would sell the factory. Last September, Lordstown revealed that they would be selling it to Foxconn, which assembles iPhones. The deal was set for $230 million. Then, they said that they would loan out space from Foxconn in the factory. The Verge reports that they needed to contract other manufacturers to help with the production of their pickup truck.

There’s no telling what will actually happen with the EV startup. Just this week, executives at Lordstown Motors said that they were looking to raise $250 million in order to build 500 of their electric trucks. They also didn’t have much to say about their supposed deal with Foxconn. According to them, the factory deal was not as far along as they had originally hoped.