Home Manufacturer fund Electric pickup trucks leave Indiana line that once made gas guzzling Hummers

Electric pickup trucks leave Indiana line that once made gas guzzling Hummers

3
0

The van, one in a series of 1,000 slated for this year, is one of the first of its kind in the US market: a lightweight all-electric vehicle for delivery people, contractors and other commercial fleets.

“Who else is starting this month? Taylor asks, browsing the list of major automakers and startups, from Ford and General Motors to Arrival Ltd. and Canoo Inc., which have announced their intention to build electric vans.

Delivery vans and other light commercial vehicles provide fertile ground for electric vehicle manufacturers, according to James Martin, consulting associate director at IHS Markit research house. Buyers are not commuters, concerned with range estimates and how to handle occasional long road trips.

Instead, they’re fleet managers who know exactly how far their vehicles will travel each day and where they plan to charge them during off-peak hours. “We think this is going to be faster than the rise in the electrification of personal vehicles,” says Martin.

IHS expects North American commercial van production to grow from around 400,000 units this year to nearly 600,000 by 2028, with electric vehicles growing from almost non-existent to nearly 40% of the market during of this period. Electric Last Mile Solutions, known as ELMS, targets the low end via a simple vehicle with relatively low range, ideal for customers carrying light packages on short, repetitive routes. The segment has exploded with the rise of e-commerce.

ELMS started in August 2020 as Plan B for Chinese automaker Chongqing Sokon Industry Group. In 2017, Sokon’s subsidiary, SF Motors, purchased the Mishawaka plant from subcontractor AM General with the aim of building an electric SUV called the SF5. But SF5 never came to Mishawaka, a town of 50,000 people at the eastern end of South Bend. When Sokon hired Taylor, a 30-year GM veteran, to take charge of SF Motors in the summer of 2019, he reviewed the business plan and concluded it was doomed. Launching an electric SUV brand in the United States would cost a lot more than Sokon had anticipated, Taylor told company executives, and it would put them in brutal competition with some really big players. Sokon heeded his advice and abandoned his US plans for the vehicle.

There remains the question of what to do with the Mishawaka plant. Taylor suggested switching to electric delivery vans, which Sokon was already producing in Asia. Sokon, however, did not want to spend more in the US market, so Taylor offered to start a new company that would raise the funds to buy the Mishawaka plant.

Taylor, 64, is familiar with the 675,000 square foot space: two decades ago, as an executive in GM’s truck group, he outfitted it to build Hummers.

In 1999, GM bought the Hummer brand from AM General and contracted with them to build a consumer version of the SUV. AM General built a factory for labor next to the one where he makes Humvees for the military. Taylor, who oversaw purchasing for the GM trucks, chose the equipment.

In 2005, 1,000 workers were building tens of thousands of Hummers per year in Mishawaka. When the financial crisis arrived three years later, the fashion faded and GM, forced into bankruptcy, decided to shut down the losing brand. The factory came back to life in 2015, when Daimler hired AM General to build Mercedes-Benz minivans for the Chinese market. But Mercedes left two years later and AM General announced plans to shut down the plant, a demise that was apparently averted with the arrival of SF Motors.

In the summer of 2020, Taylor and his co-founder Jason Luo, a longtime automotive executive who briefly ran Ford China, began trying to raise money for ELMS. It was during the rise of the SPAC fever. In the six months preceding the founding of ELMS, electric vehicle startups Nikola Corp., Fisker Inc., Lordstown Motors Corp. and Canoo had all announced their intention to enter public markets through mergers with specialist acquisition companies.

PSPC intrigued Taylor. Since leaving GM in 2010, he’s worked at two electric vehicle companies – now Workhorse Group and Karma Automotive – and has seen enough of the traditional fundraising process to know he’d be happy to. move quickly. “It allows you to get the money a lot faster,” he says, “and it arrives in a gigantic loaded train. “

In the fall of 2020, Taylor and Luo began discussing a merger with a SPAC called Forum Merger III, which had recently raised $ 250 million. By the end of October, they were ready to approach private equity firms, hedge funds, and investment banks to add to this pool of funds through a so-called private equity investment, or PIPE. In December, Forum announced the proposed merger, which valued ELMS at $ 1.4 billion. With $ 155 million in PIPE money, the deal was expected to generate nearly $ 380 million in gross proceeds for ELMS.

The companies originally hoped to complete the deal in the first three months of 2021, but this was delayed after the Securities and Exchange Commission began to take a closer look at PSPCs. EV companies that predated ELMs in public markets had illustrated the downside of giving startups one big bucket of money at a time: few live up to their hype. After filing new documents to meet the new SEC guidelines, ELMS finalized the merger and began trading on the Nasdaq in late June. As soon as the funds were in the bank, Taylor made a $ 30 million down payment on the $ 145 million purchase of the Mishawaka plant and began equipping it to assemble electric vans.

ELMS takes a crawling before walking approach to production. For now, pickup trucks arrive in Indiana from factories in China as “pushers”, complete with chassis, frames, batteries and wheels. In Mishawaka, around 20 hourly workers spread over a handful of stations add steering wheels and a few electronic components. It’s a throwback to the Hummer days, but if all goes according to plan, the ELMs could take the factory back to something close to that scale.

Over time, the company plans to purchase more parts from US suppliers and perform more assemblies in Mishawaka. ELMS told Indiana Economic Development Corp., a public-private partnership, that it plans to create up to 960 new jobs by building 100,000 vehicles per year by the end of 2024. If so , the IEDC will grant $ 10 million in tax credits.

“Everyone here is thrilled that the doors are opening,” says Bryan Tam, 62, an ELM plant manager who has worked in Mishawaka throughout its 20-year history.

The initial 1,000 ELMS vans are heading to Randy Marion Automotive Group, a North Carolina dealership group whose namesake and founder was in Mishawaka on Tuesday for a key-handover ceremony. Its first few hundred vans are destined for campuses, airports and other spaces where they won’t meet public roads, saving ELMS from having to meet comprehensive safety standards until it ramps up production. .

Vans are essentially bread boxes on wheels. But the company is not looking to turn heads on the sidewalk. He hopes to grab the attention of fleet managers with a simple proposition: save money by going electric. The vehicles have a range of 100 to 120 miles, 171 cubic feet of cargo space (enough to carry several hundred shoe boxes) and cost around $ 27,000 after a federal tax credit of $ 7,500. . According to ELMS estimates, the total cost of ownership, including fuel and maintenance, is 35% cheaper than comparable gas-powered vans.

While ELMS is betting on the advantage by being first, the competition is not far behind. Ford, Daimler and General Motors all plan to introduce commercial electric vans in the United States by 2023. Earlier this week, GM unveiled a midsize freight carrier and announced that it has signed on to Verizon Communications Inc . as its first customer. Rivian Automotive, meanwhile, has already taken an order for 100,000 vans from Amazon.com Inc., with the first due to arrive this year.

“It’s an incredibly short window,” says Reilly Brennan, founding partner of San Francisco Trucks’ venture capital fund. “The clock is ticking. “