Pence Hails Lordstown Motors as Savior. It Just Needs Cash.

(Bloomberg) -- Taking the stage at the former General Motors Co. plant in Lordstown, Ohio, where electric-truck startup Lordstown Motors Corp. is working to get production going, Vice President Mike Pence hailed the company as an economic lifeline for the region.

“It’s a great new beginning for Lordstown and a great new beginning for electric vehicles in the U.S.,” Pence said after riding onstage in the Endurance pickup being introduced by the company. Name-checking his boss, Donald Trump, Pence called the event “one more example of a president who is committed to making manufacturing great again.”

Now comes the hard part for Trump and Pence, who are trying to court voters in Ohio and ward off Democratic presidential candidate Joe Biden. A concept vehicle that drives is one thing, but taking Lordstown Motors to full production is another. Chief Executive Officer Steve Burns still needs funding for his quest to sell pickups that will face competition from well-funded segment newcomers including Tesla Inc. and Amazon.com Inc.-backed Rivian Automotive Inc., not to mention stalwarts like GM and Ford Motor Co.

The Trump administration is counting on Lordstown Motors to salvage political capital lost when GM decided to abandon the Ohio plant last year. Its closure stung because the president had promised to revive the region following a decade of decline in steel and automotive jobs that left the area bereft of industrial work. In July 2017, Trump told residents at a rally in nearby Youngstown not to sell their homes because jobs would be coming back.

At its peak, GM employed 10,000 at the plant. Its ranks had dwindled to about 1,500 by the time the company shut down production in March 2019, and most of those workers either retired or transferred to plants in states including Tennessee, Indiana or Kentucky. So far, fledgling Lordstown Motors has hired just 70 full-time staff, not including more than 100 contractors helping retool the facility.

The Lordstown plant is a massive factory that takes up significant space along the Ohio Turnpike. GM had capacity to build as many as 400,000 cars a year there.

Sales Outlook

LMC Automotive, a consulting and forecasting firm, doesn’t see Lordstown Motors selling 5,000 trucks a year there after production starts late in 2021, said Jeff Schuster, LMC’s senior vice president of forecasting. “The level of information from the company is sketchy at best,” Schuster said. “I struggle to see how they get to anywhere near the volume that fills Lordstown.”

Burns said at the press conference today that he has letters of intent for fleet buyers to support his first year of production. Pence said there are pre-orders for about 14,000 trucks.

The CEO acknowledged that it will be tough for a startup to compete, but said said his truck will sell because it is designed for commercial users. Its four electric motors give it better traction than any truck on the market. And it will be much cheaper to fuel, he said.

“Our lane is pure,” Burns said. “No one else is making electric trucks for workers.”

The Lordstown factory has been a thorn in Trump’s side and a source of ire with GM and its Chief Executive Officer Mary Barra. When GM put the plant on a list of factories that had no new vehicles to build and were at risk of closure, the president called to complain and attacked the company and Barra on Twitter.

Last year, Trump fanned the flames between GM and the United Auto Workers, which fought to save Lordstown and other factories. The union went on strike for 40 days last fall.

When GM shared with Trump in May of last year that it would sell the plant to Lordstown Motors, which has historic ties to Workhorse Group Inc., Trump hailed the development as “GREAT NEWS,” on Twitter. Workhorse has about a 10% stake, according to Burns, who used to be CEO of that company based near Cincinnati.

“Thanks for stepping up and starting a new chapter of history here in Lordstown,” Pence said to Burns. “It’s a tribute to a president who was not shy about letting his feelings be known about the future of Lordstown.”

©2020 Bloomberg L.P.