With GM backing, EV start-up Lordstown joins EV float frenzy

Aspiring electric pick-up truck maker Lordstown Motors is the latest EV start-up to go public.

Joining the likes of Nikola and Fisker, Lordstown is trying to ride the current stock market mania for EV makers that has seen Tesla replace Toyota as the world’s most valuable car company.

Like Nikola and Fisker, Lordstown is proposing to use a reverse merger agreement with a special purpose acquisition company (SPAC) that is valued at US$1.6 billion ($2.2 billion).

Nikola has successfully executed its reverse merger, while Fisker is proposing to have its reverse merger completed in the third quarter of 2020.

Also like Nikola and Fisker, the Lordstown float comes before the one-year-old company has managed to sell a vehicle.

The US$675 million ($937 million) forecast to be generated will be pivotal in getting Lordstown’s first vehicle, the hub-motor Endurance pick-up, into production and on-sale by mid-2021.

Lordstown founder and CEO Steve Burns has previously stated it needed US$450 million (AU$625 million approx) to get the Endurance into production.

Lordstown revealed the production version of the Endurance in June and more recently released a video promotion showing it at work.

That tallies with Burns’ stated aim to pitch the Endurance as ‘work truck’ aimed at fleet customers.

Burns told CNBC he started looking at SPACs and a public float about three months ago when the COVID-19 health crisis began to impact other sources of funding.

“It does seem Wall St goes from thing to thing and peaks and valleys and if we were going to do it we wanted to do it while the appetite was there,” he said.

“We really feel we differentiated from the others that have come out; we  have a factory, a prototype and we are marching towards production.

“We’ve got 27,000 orders, there is no electric pick-up out there at the moment.”

Another thing going for Lordstown through all this is the substantial backing of General Motors.

GM loaned it US$40 million ($55 million) to buy the plant and has invested a further US$75 million ($104 million) in cash and kind, guaranteeing it a seat on the soon-to-be public company’s board.

GM isn’t the only legacy player to invest in a start-up, with Ford pitching US$500 million ($695 million) into Rivian, which launches its first pick-up and SUV mid-2021.

Rivian also has substantial backing from Amazon and is rated as one EV start-up that has a high chance of success. It has not gone public and says it has no plans to do so.

The funding frenzy for EVs isn’t limited to Nikola, Fisker and Lordstown, with Karma Automotive, China’s Li Auto and Xpeng and others getting cash injections one way or another.