eResearch | Lordstown Motors (NASDAQ:RIDE), a U.S. electric vehicle (“EV”) start-up, recently listed publicly on the NASDAQ Global Select market. Lordstown’s stock started trading at $18.97 per share with a $3.1 billion market capitalization.
Lordstown facilitated the public listing through a business combination with DiamondPeak Holdings (NASDAQ:DPHC), a special purpose acquisition (“SPAC”) company. The merger provided a transaction value of $1.6 billion.
The transaction raised $675 million in gross proceeds, which included $500 million from a fully committed private investment in public equity (“PIPE”). The PIPE included a $75 million investment from General Motors (NYSE:GM).
Over the next year, Lordstown plans to allocate proceeds from the public listing as follows:
- $130 million for operating, general, and administrative expenses.
- $120 million for retooling its production facility.
- $90 million for research and development.
After trading in the $12.80 to $30.75 range, Lordstown’s stock is currently trading at $19.20 per share.
Lordstown Motors
Lordstown is currently focused on developing its flagship vehicle, the fully electric Endurance pickup truck, which is targeted towards fleet customers.
According to Allied Market Research, the EV industry was valued at $162 billion last year, and is forecasted to reach a value of $802 billion by 2027, growing at a CAGR of 23%.
The Endurance is estimated to have a 500% more efficient fuel economy than a traditional pickup truck with an internal combustion engine.
FIGURE 1: Lordstown Endurance Pickup Truck
In June, Lordstown unveiled an operational prototype of the Endurance, which is expected to be priced at $52,500 per unit. U.S. consumers will be able to receive a $7,500 federal tax credit for purchasing an alternative fuel vehicle.
Lordstown is currently retooling a 6.2 million square foot production facility in Lordstown, Ohio, previously owned by General Motors. The production facility was bought from General Motors at the end of last year for $20 million.
Last week, Lordstown announced receiving a total of 50,000 non-binding orders for the Endurance, with an average order size of approximately 500 EVs per fleet.
Deliveries for the Endurance is expected to start in H2/2021, with full production ramping up throughout 2022.
Partnerships
Lordstown leverages partnerships with various technology companies to support the development and design of its EVs.
The battery used in the Endurance is the Samsung 21700 battery cell, developed by Samsung Electronics (KRX:005930), a South Korean technology company. Lordstown entered into two supply agreements with Samsung to purchase lithium-ion cylindrical battery cells for a term of 4-5 years.
This year, Lordstown received intellectual property (“IP“) rights from Elaphe Propulsion Technologies to integrate a revolutionary in-wheel hub motor into the Endurance. Elaphe’s motor design is expected to enable superior performance and safety, while significantly reducing costs.
Last year, Lordstown received certain IP rights from Workhorse Group (NASDAQ:WKHS), a U.S. electric-mobility solutions company, for technologies to be used in the Endurance. Workhorse received a 10% equity stake in Lordstown, in addition to a royalty agreement for 1% of gross sales proceeds from the first 200,000 EV sales.
Financials
Lordstown has a limited operating history and has yet to generate any revenue, as it transitions from research and development activities to commercial production and sales.
Next year, Lordstown forecasts the production and sale of 2,200 EVs, which represents approximately $116 million in potential revenue. However, Lordstown expects to see increased general and administrative expenses from hiring workers to build the EVs.
For the nine months ended September 30, 2020, Lordstown reported a net loss of $2.4 million, which included G&A expenses of $3.3 million, offset by interest earned on marketable securities of $1.1 million. In the same period last year, Lordstown generated a net income of $2.3 million, which included G&A expenses of $0.4 million, offset by interest earned on marketable securities of $3.4 million.
Lordstown’s interest income stems from $284 million in marketable securities received from DiamondPeak through the merger. Last year, DiamondPeak raised $250 million from an initial public offering to fund a potential merger with a company planning to list publicly.
In 2019, Lordstown had a net loss of $11 million, consisting of $5 million in G&A expenses and $6 million in R&D expenses.
Electric Vehicles for Fleets
Almost all fleet vehicles today are currently powered by fossil fuel, which provides a significant opportunity for EV manufacturers.
Another fleet-focused EV company that announced plans to go public this year is XL Fleet (NYSE:XL), previously reported by eResearch in October, 2020: Vehicle Electrification Provider XL Fleet to List Publicly on the NYSE at $1B Valuation.
FIGURE 2: Lordstown Stock Performance Since Listing Publicly
Notes: All numbers in USD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article.
