One Electric Car Company That Could Save the Rust Belt
If you drive across northeastern Ohio just outside of Youngstown, you’ll come across a huge compound visible from the highway that dominates the landscape.
The 6.2 million-square-foot facility is impossible to miss. But if you look closer, you may notice a few things off about it.
For one, the parking lot is massive, but seemingly empty of cars minus a few here or there.
And while one may assume COVID-19 is the cause of the lack of vehicles, you’d be sadly mistaken…
The facility back in its heyday was owned by General Motors, and at its peak employed 10,600 people in the ’90s.
Sadly, though, GM has had a turbulent few decades since then — filing for bankruptcy in 2009… and last year things got even worse.
In late 2018, GM decided to lay off 14,000 of its workers altogether and shuttered underused plants like the one in Lordstown.
Thousands were either laid off or forced to relocate across the country. And the giant sign on the side of the plant reading LORDSTOWN HOME OF THE CHEVY CRUZE would become just a reminder of a once-great bustling complex. It represented stability in an area already hard-hit by industry leaving in the ’80s.
And sadly, it’s just one more story to come out of the Rust Belt that highlights the area’s struggle to keep industry alive.
But the good thing is there’s still hope for Lordstown.
You see, when GM shuttered the plant, they sold it.
And the winner has huge potential that could make Lordstown a great manufacturing city once again.
Manufacturing Rises From the Ashes
GM sold the plant in its entirety to a new startup called Lordstown Motors.
And they specialize in making electric vehicles — specifically electric trucks.
Its first model, the Endurance, is a full-sized pickup truck with a range of 250 miles.
And it has several features that look to make it stand apart from normal vehicles out there.
First off, it features four motors, delivering different amounts of power to each wheel — allowing it to perform incredibly in poor driving conditions.
Furthermore, the Endurance will have the fewest moving parts of any vehicle, according to Lordstown Motors. If they can pull this off, it would mean fewer maintenance costs in the long run for owners.
And finally of course, its fuel cost would be a third of that of your normal Ford F-150’s, making it overall more economical while at the same time offering useful features for the owner of the vehicle. Not to mention federal and local tax credits granted from purchasing an electric vehicle.
And now, in a twist of events, GM helped fund Lordstown Motors to go public.
GM’s ties to Lordstown Motors were never cut, as GM continued to help pay for operational costs of the facility. And Lordstown Motors will use “GM components” in the Endurance once everything is up and running.
Lordstown Motors expects that it will generate $118 million in revenue next year and $1.7 billion in revenue in 2022 just from the electric truck sales. And if successful, they’ll look to get into the electric SUV market.
With only 70 workers right now, it’s still a very small project.
But if successful, this has huge potential written all over it. It has a real shot at competing with the big EV names out there like Tesla or Nikola (NASDAQ: NKLA).
And this could mean big things. Not only for Lordstown Motors, but for GM and the whole area of northeastern Ohio.
So How Do I Play This?
The first thing I will say is be extremely cautious if you decide to invest with Lordstown Motors.
Right now they are using a SPAC, similar to a reverse merger, to enter into the public markets — just like how new companies like Nikola Corp. or Virgin Galactic Holdings Inc. (NYSE: SPCE) IPO’d.
DiamondPeak Holdings Corp. (NASDAQ: DPHC) is currently what they are listed as and eventually will change to the symbol RIDE.
But again, be VERY careful if you decide to invest with Lordstown Motors.
The stock is currently experiencing a FOMO period, already jumping over 25% in three days — with wild swings each way. It’s possible that it will either keep going up and level off or come crashing back down.
Remember, this stock jumped without having ever made a single vehicle.
Talk to your broker and get their financial advice if you do plan on entering into a position.
To a bright future,