Hybrids & Electrics

This Electric Truck Company Is in Serious Financial Trouble

The latest recession has put a lot of auto companies in a tough situation. Though there have been some improvements recently,  stock prices for each of the Big Three have been lower than usual and the companies have had to make cost reductions. Following a huge tax cut last year, 1,500 workers were laid off from the Chevrolet Cruze car plant in Lordstown, Ohio.

However, recent developments have shown that there may be some hope for the abandoned car plant. GM has been in talks with a group called Workhorse about purchasing the plant. This could mean an increase in GM’s profits and new jobs for the displaced workers in Ohio.

How Workhorse could revitalize Lordstown

Workhorse is a truck company based in Cincinnati, Ohio. It primarily builds electric pickups and delivery vans, though it has also produced hybrid drones and other aircraft. Workhorse is one of the few companies that hopes to secure a contract with the USPS to produce mail delivery trucks. If awarded the deal, Workhorse would be able to make 180,000 trucks over a period of five-to-seven years, with each truck costing $25,000 to 35,000. The previous CEO of Workhorse, Steve Burns, believes that buying the vacant GM plant could give the company a leg up over the competition.

If GM agrees to the deal, Burns would be the head of a new company called Lordstown Motor Corp. Workhorse would own 10% of the new company, and Burns plans to raise a substantial amount of money to support the merging with GM. Lordstown Motors plans to license Workhorse’s technology to produce their own version of W-15 electric pickup trucks. The plant would also serve as Lordstown Motors’ research and development center.

GM has many things to gain from this partnership. The new company would create thousands of new vehicle production and assembly jobs to the people of Lordstown, Ohio and its surrounding cities. GM could trust Workhorse as a long-term business partner since the company has more than 50 years of experience producing high-quality electric trucks. Workhorse has a firm belief that the support and demand from GM’s customers will make the project a success. While the contract from the USPS would definitely generate a lot more revenue, the company has stated that it plans to re-open the plant don’t depend on this deal alone.

Financial uncertainty

While this deal could mean major success for both parties, some are still doubtful about the project. The number of trucks sold by Workhorse year after year has continued to decrease, and it was never that impressive to begin with. The company only made $6,000 this quarter and reported $37 million in losses. Despite Burn’s plans to raise money to help fund the union with GM, Workhorse’s financial outlook is still tenuous due to its history of low profits, which could mean an unsteady start for Lordstown Motors.

There has also been some misinformation about the deal that left locals confused about how Workhorse had enough money to secure the old factory.  Donald Trump released a tweet thanking GM’s CEO Mary Barra for the proposed deal, stating that Workhorse was in talks to buy the plant. The Lordstown plant would actually be purchased by Lordstown Motor Corp.

https://twitter.com/car247co/status/1159283597397909505

Potential success

Despite Workhorse’s financial woes, Steve Burns and his team and Lordstown Motor Corp are still hopeful for the success of the project. The leaders met with officials from Mahoning Valley last Friday to discuss how the new company could collaborate with local businesses and Youngstown State University to increase their chances of a fruitful business venture. Lordstown Motors hopes to begin production on pickup trucks under the new company name early next year.

Tags: