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Lordstown Motors CEO Burns: Merger financing was 'the last piece we needed' to hit 2021 production goal

By merging with a 'blank check company' and going public, Lordstown Motors Corp. will 'RIDE' to market in 2021, executives said.
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Shown here is one of the many manufacturing robots that once helped make General Motors' Chevrolet Cruze line. Much of the former General Motors Lordstown Assembly Complex's innards were left intact when the plant was sold to electric vehicle startup Lordstown Motors Corp., which is developing its first vehicle, the Endurance. (Justin Dennis | Mahoning Matters)

LORDSTOWN — Lordstown Motors Corp. will “RIDE” the NASDAQ, and, in the next four years, expects to turn a profit selling the all-electric Endurance pickup truck at 100,000 units per year, executives announced Monday.

The Lordstown-based all-electric pickup truck maker announced Monday it would merge with DiamondPeak Holdings Corp., (NASDAQ: DPHC) a special purpose acquisition company, or SPAC. When that transaction closes, expectedly in the fourth quarter of this year, the combined entity — which will retain the Lordstown Motors Corp. name — will be publicly traded on the NASDAQ and that DPHC ticker symbol will change to “RIDE.”


Merging with a SPAC — which are often called “blank check companies” — to make an initial public offering and invite new financing is a road traveled by other electric vehicle startups this year, including Nikola Corp., whose stock started trading in June after SPAC backing, and Fisker Inc., whose SPAC merger was announced in mid-July.

Lordstown Motors’ deal includes a $500 million private investment in public equity — or PIPE — $75 million of which is reported as in-kind contributions already provided by General Motors Corp. About $675 million in cash proceeds from the transaction will be used to get the Endurance to production next year.

Lordstown Motors executives told reporters in November — the day they got the keys to Lordstown’s 6.2-million-square-foot assembly complex from General Motors — the startup would need upwards of $300 million to get to production. In a video statement released by the company Monday, Lordstown Motors CEO Steve Burns said DiamondPeak’s SPAC financing was “the last piece we needed” to hit their 2021 production goal.

“COVID kind of put the brakes on some of the private funding we were talking to, so we started talking to SPACs maybe three months ago” and interviewed with a handful of them, Burns said during a Monday interview on CNBC’s Fast Money.



The Endurance, a light-duty pickup truck being marketed toward commercial fleet buyers, has about 27,000 units pre-ordered to date, totaling about $1.4 billion in potential sales, Burns told DiamondPeak investors in prepared remarks during an early Monday conference call with DiamondPeak investors.

Those preorders account for at least the truck’s first year of production, Burns said during the truck’s official unveiling in June.

Currently, the company is in the equipment installation and testing phase. Pre-production is expected to begin this quarter and full production is expected to spin up in early 2021, with the first units being delivered in the second half of the year, Burns told investors.

“We hear from many fleets that cannot wait to get their hands on the Endurance,” he said, adding the company looks to break even “or better” in 2022, the truck’s first full year of production, and hit a 10-percent profit margin in 2024, when Lordstown Motors expects to be selling 100,000 units a year.

With tax credits, the Endurance is expected to cost about $45,000, he said.

“We have the product, the team and a huge timing and financial head start, due to our strategic relationships,” Burns said.

Following the merger, the combined entity has a potential valuation of $1.6 billion, according to the Monday release. Lordstown Motors would become a wholly-owned subsidiary of DiamondPeak, according to U.S. Securities and Exchange Commission filings from Aug. 1. Its board of directors would include Burns and DiamondPeak’s CEO David Hamamoto.

Special purpose acquisition companies, or SPACs, are often called “blank check companies.” They’re shell companies created with the specific intent of raising capital to first become publicly traded, then merge with other businesses, according to the Winston and Strawn LLP law firm.

DiamondPeak shares rose 21 percent Monday, reaching $12.39 at close.

The majority of the Lordstown deal’s $500 million PIPE investment comes from institutional investors like Fidelity, Federated and BlackRock.

SPACs have a certain amount of time to complete a merger before being liquidated. DiamondPeak first went public in 2019, according to Hamamoto. Since then, it interviewed hundreds of companies for merger, but ultimately settled on the “transformational product and business plan” of Lordstown Motors, he told investors Monday.

“Lordstown’s top-tier management team, led by Steve Burns, has captured a clear lane of customers in the fleet market,” Hamamoto said.

Burns, responding to CNBC’s questions on the ongoing “frenzy” of electric vehicle-related SPACs and skepticism about their potential returns, put his faith in the product itself.

“At the end of the day, we have to make a great truck. If we make a great truck and we have happy customers, no matter what our financing facility is, we’ll be successful,” he said.

Justin Dennis

About the Author: Justin Dennis

Justin Dennis has been on the beat since 2011, covering crime, courts and public education. Dennis grew up in Poland and Salem and studied journalism and communications at Cleveland State University and University of Pittsburgh.
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