With the U.S. Securities and Exchange Commission requesting voluntary information at the start of the Lordstown Motors electric van, more details of the agreement between the company and one of its key sponsors, General Motors, come to light. . A major advantage in the GM deal was a claim for most future federal emissions credits from Lordstown Motors.
As part of SEC application from Lordstown Motors for the previous fiscal year, the company revealed that General Motors sponsor retained the option to purchase the first three full years of emissions credit rights since launch, with credits discounted to be valued at 75 percent of the price normal market. The detail and a clip of the presentation were highlighted by Sean O’Kane of the Virgin on Twitter:
The U.S. government has put a cap on “permissible” emissions from car manufacturers and created a emissions trading program or bonuses allow automakers that exceed the cap to swap credits with other companies with leftover credits. This allows emission-heavy car manufacturers such as Jeep, Ford and Chevy to continue to produce large volumes of vans well above their corporate emission limits because they can buy credits from companies like Tesla, which does not use any of its credits. of vehicle emissions, as it produces purely electric cars.
At the time of GM’s startling decision to support Lordstown Motors, it did seemed an attempt to calm former President Trump’s administration by securing more American manufacturing in Lordstown, Ohio, assembly plant. And the deal also accelerated the development of GM EV trucks. It was never clear what the motivation of the deal was for GM, but winning a huge sack of discounted emissions credits makes the deal more clearly focused.
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If Lordstown’s initial plans to go into production in late 2021 were really successful, GM’s guarantee of the first three full years of emissions credits would allow it to sell more V8 engines in vans, SUVs and sports cars. Basically, GM’s idea was to turn Lordstown into its own Tesla-like credit machine instead of having to buy them elsewhere.
The move is great on paper, as in addition to getting more space to play with V8 engines for a few more years, GM would also benefit from the EV pickups that Lordstown sells thanks to its investment. This also allows GM to boot Lordstown’s technology and platform for its own vehicle brands.
The only problem now is that Lordstown Motors is in difficult waters with the SEC and is under a cloud after a research company claimed it had falsified orders and deceived everyone as to its production capacity and timing. . GM won’t get any discounted credit if Lordstown never makes trucks, so we’ll just have to see if the investment pays off.