Lordstown Motors could be hurt by the Trump administration’s 2021 proposed budget.
Almost as quickly as General Motors’ former Lordstown, Ohio plant was saved by the automaker selling it to a new owner, it may be in jeopardy once again courtesy of the Trump administration.
Ironically, it was President Donald Trump who pounded his fist, demanding GM keep the plant open or find a buyer, and now he could have a hand in putting it in a precarious position courtesy of his 2021 budget. The new budget would eliminate the Advanced Technology Vehicles Manufacturing Loan Program, or ATVM, the Energy Department’s loan-guarantee program for advanced auto technology.
Lordstown Motors Corp., the company formed by the former Workhorse Inc., was in the process of applying a $200 million loan from the fund to aid in the development of an all-electric delivery vehicle and pickup, but had not yet applied for a loan.
(GM sells Lordstown plant to Workhorse.)
The proposed move to eliminate the program in the budget drew a negative bipartisan response from Ohio politicians, led by U.S. Rep. Tim Ryan (D–Ohio).
The Trump administration’s budget would eliminate a loan program for advanced automotive technology.
“This isn’t a handout. This is a loan that will be repaid in full with interest,” he said in a statement highly critical of Trump. “I will be using my position on the House Appropriations Committee to block the Trump administration’s efforts to end this important program, and I will continue fighting to ensure Lordstown Motors has everything they need to do their important work and get Northeast Ohioans back to work.”
In the 2021 budget proposal, the Trump administration describes the AVTM as “costly, wasteful, or duplicative.”
The company has already received an estimated 6,000 orders for its battery-electric pickup truck, the Endurance. Much of the initial production is expected to be sent companies seeking work trucks. However, the $52,000 truck – before any tax credits – is ultimately expected to compete with Tesla, Rivian, Ford and the former owner of the plant, GM.
(Trump smacks GM with new Lordstown tweet.)
The company is furiously readying the plant to begin production of these new trucks, which are slated to hit the road in the final quarter of this year. However, the company was seeking a reported $300 million in funding to make the business viable. Some of that, the aforementioned $200 million, was expected to come from the AVTM program.
To be clear, there is plenty of money allocated for the program — $25 billion to be exact. The ATVM loan program was established in 2007. Since it began, it has only offered five loans and none since 2011. About $12 billion in ATVM loans sought by six applicants are on hold. The program still has more than $17 billion available to loan.
Start-up Lordstown Motors plans to produce its own all-electric pickup at the old GM Ohio assembly plant.
The track record on the loans is inconsistent, although it does have one highly visible success story: Tesla. The California-based EV maker used a $465 million loan to fund production of its Model S sedan in 2010. The vehicle, which launched the company, ultimately sold well enough to inspire other investors to plow billions into it.
Tesla is now the best-selling electric vehicle company in the world, expected to begin delivering its fourth high-volume vehicle, the Model Y, by the end of this month. The automaker paid the loan back in full in 2013.
(VP Pence Touts GM Deal for Lordstown plant; UAW says not so fast.)
Nissan repaid its $1.45 billion loan in 2017 while Ford is expected to make its final payment on its $5.9 billion loan in 2022. Two other loan recipients, Fisker ($193 million) and Vehicle Production Group ($50 million), went bankrupt. The program still has nearly $17 billion available to loan, according to Electrek.co, and the loans earned the federal government more than $3 billion in interest payments.