The timing of the DiamondPeak Holdings (NASDAQ:DPHC) and Lordstown Motors merger is noteworthy. Electric vehicles are catching the attention of mainstream investors with an eye on the future. Holders of DiamondPeak stock, meanwhile, will be part of that developing story.
![White chalk on pavement shows a plug-in electric vehicle.](https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif)
There are several entrants in the electric-vehicle arena. However, as sports fans know well, it is really tough to get and hold a spot in the major leagues.
That’s another way to say not all of the companies vying for electric-vehicle contention will survive. This is a burgeoning transportation segment that carries risk along for the journey.
Will electric vehicles soon replace all of our internal-combustion cars and trucks? The answer depends on what you mean by soon. Replacement likely will take many years to effect around the globe. But great strides can happen more quickly in first-world economies.
Key advances in technology combined with potent concern about the environment are setting the stage.
DiamondPeak Stock and the Merger
The Lordstown Motors-DiamondPeak merger was slated to take place on Oct. 22.
Holders of DiamondPeak stock have invested in a special purpose acquisition company formed for a deal like this. A SPAC raises funds and completes an initial public offering, then seeks a partner. SPACs have become a popular method to “go public.”
At some point, DiamondPeak and the DPHC ticker for DiamondPeak stock will go away. They will be replaced by Lordstown Motors and RIDE – which seems more appropriate for the maker of vehicles.
The story of Lordstown is interesting and touches anyone who backs American manufacturing.
Lordstown Motors is named for the Ohio community and shuttered auto plant where it is based. General Motors used to employ some 10,000 people there. Sadly, the automaker closed the plant as it continues to consolidate its manufacturing resources.
While the loss of General Motors (NYSE:GM) jobs will always accrue to the company’s shame, there is reason to cheer the resurgence of the plant to make a vehicle for the future.
Steve Burns, CEO of Lordstown Motors, says 600 employees will be hired initially. The goal is to produce 20,000 Endurance pickup trucks next year. Burns predicted 4,000 to 5,000 employees will work at the 6-million-square-foot plant making the Endurance, a light-duty vehicle, but also a larger truck and an SUV.
GM sold the plant to Lordstown for $20 million.
“We didn’t buy a mass volume plant like this and not plan to fill it up,” Burns told the Detroit Free Press. “This is a gem of a building built for volume manufacturing.”
Ready for the RIDE?
Americans love pickup trucks. American companies love them, too. The Endurance is a vehicle targeted at a profitable and seemingly insatiable segment.
As Lordstown’s first product, the Endurance will feature an electric engine that will be efficient and powerful, the company says, while helping reduce pollution. It will be an all-wheel drive vehicle with a range of about 250 miles per charge, Burns said.
Lordstown Motors will be making its own battery packs and motors. It also will license a truck design from Workhorse Group (NASDAQ:WKHS), which Burns also founded.
The company says it has 27,000 pre-orders for the trucks. Each truck will cost about $52,500.
The Bottom Line
DiamondPeak Holdings is on the verge of transforming into Lordstown Motors with a new ticker – RIDE – to boot.
Investors in DiamondPeak stock bought into a speculative venture in an exciting but still emerging transportation segment. Companies around the world are spending significant sums of money to design and sell electric vehicles to consumers and businesses interested in performance, less maintenance and less pollution.
When I say this segment is emerging that includes a warning that there is more risk for investors who bet on brand new companies. That said, DiamondPeak-Lordstown appears to have promise. And an investor comfortable with an above-average amount of risk should seriously consider buying this stock.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.