Lordstown Motors, the bankrupt electric vehicle startup, has announced plans to sell its remaining assets to an investment firm led by founder and original CEO Steve Burns. The investment firm, LAS Capital, which includes former Lordstown Chief Financial Officer Julio Rodriguez as a major shareholder, has agreed to purchase the assets for $10 million in cash.
Both Burns and Rodriguez left Lordstown in 2021 following an internal investigation that revealed inaccuracies in the claimed pre-orders for the company’s debut vehicle, the Endurance full-size pickup truck. Burns, who is also the founder of Workhorse Group, a company that manufactures electric commercial vans, trucks, and drones, has now returned to try to salvage the remaining assets of Lordstown Motors.
The assets that LAS Capital has agreed to purchase include certain intellectual property, as well as manufacturing equipment for batteries and motors. It’s worth noting that the plant where the Endurance was built, a former General Motors plant in Ohio, was sold by Lordstown to Foxconn in 2021. This deal was supposed to involve Foxconn building the Endurance and co-developing future models for Lordstown. However, the partnership fell through, and Lordstown subsequently filed for Chapter 11 bankruptcy protection in June.
The completion of the asset sale to LAS Capital is contingent upon court approval and is expected to be finalized by the end of October. This transaction represents a potential lifeline for Lordstown Motors, as it would enable the company to liquidate its remaining assets and recoup some of its losses.
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The Endurance, which incorporated in-wheel motors, faced numerous challenges during its production. While it started production in late 2022, it was only in production for a few months and only a limited number of vehicles were built. Production was initially halted due to an electrical issue found in the trucks, and later, the cost of manufacturing the trucks exceeded their selling price. These setbacks contributed to the company’s financial downfall and ultimate bankruptcy filing.
Before filing for bankruptcy protection, Lordstown Motors tried to strike a deal with Foxconn to develop a next-generation vehicle to be built at the Ohio plant. Unfortunately, this deal fell through when Foxconn withdrew its investment. The failure of this partnership further compounded the financial difficulties faced by Lordstown Motors.
While the acquisition of Lordstown Motors’ assets by LAS Capital represents a new opportunity for the company, there are still significant challenges ahead. The electric vehicle market is highly competitive, with established players such as Tesla, as well as emerging companies like Rivian and Lucid Motors, vying for market share. Lordstown Motors will need to demonstrate its ability to innovate and compete effectively to regain investor confidence.
Additionally, the success of LAS Capital’s investment in Lordstown Motors will depend on various factors, including the company’s ability to develop and bring to market compelling electric vehicle offerings. It will also be essential for Lordstown Motors to address the issues that led to its initial downfall, such as accurately representing pre-orders and effectively managing manufacturing costs.
Overall, the acquisition of Lordstown Motors’ assets by LAS Capital represents a promising opportunity for the electric vehicle startup to potentially make a comeback. However, the company will face significant challenges as it seeks to rebuild its reputation and compete in the increasingly crowded electric vehicle marketplace. Only time will tell if Lordstown Motors can rise from its bankruptcy and establish a sustainable future in the rapidly evolving world of electric transportation.
