Lordstown Motors is seeking additional capital in order to begin production of its new Lordstown Endurance electric pickup.
The Ohio-based company, which purchased GM’s Lordstown Assembly plant in 2019, said in a regulatory filing on Tuesday that it has a “going concern” it will be able to remain operational in the coming months due to a lack of funding. Lordstown Motors CEO Steve Burns has scheduled a press conference with the Automotive Press Association next Tuesday, at which point he’s expected to provide a clearer picture of the situation the company is facing.
Lordstown Motors shares fell by more than 16 percent on Tuesday in the wake of the regulatory filing as investors bailed out of their positions in the struggling start-up.
GM owns 7.5 million shares of Class A common stock in Lordstown Motors, equivalent to an equity value of $75 million. The small stake in the company is representative of the value of the Lordstown Assembly plant and other minor contributions it made to help Lordstown begin re-tooling the plant. Auto industry analyst Sam Abuelsamid told The Detroit Free Press this week that GM could still retain the plant in Lordstown Motors were to go bankrupt, though this would depend on the details of the agreement between the two companies.
“It’s possible that GM could repossess the factory,” Abuelsamid told The Free Press. “If the debt was traded for equity and Lordstown Motors goes under, then GM would probably lose it all, although again depending on how the deal was set up they might get back the factory or something from a liquidation.”
Lordstown is still targeting a September production start date for the Endurance pickup, which is being marketed as a budget-minded electric pickup for fleet customers. However Burns acknowledged the production output for this year would “at best” be cut by around half of his initial 3,000-unit target.
The U.S. Securities and Exchange Commission launched an investigation into Lordstown Motors in May after a short-seller report published by Hindenberg Research claimed the automaker misled investors in order to raise capital. The company said previously that it had racked up 100,000 non-binding pre-orders for the Endurance, but Hindenberg says these preorders are “largely fictitious.”
“Our conversations with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy,” the report said.
Lordstown Motors says it is co-operating with the SEC investigation.
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Comments
It looks ugly, especially the front end.
The truck would look a little decent if the damn thing didn’t have lines running all over the sheet-metal and unfortunately, it’s already starting to look dated. In all fairness, I just hope that they are willing to get the financial support that they need in order to get things going there , the state of Ohio certainly has it share of closed factories and Lordstown Motors doesn’t need to become yet another empty promise within that state.
Lordstown is in serious trouble, the executive staff seem to be scammers, taking their personal profits and leaving the investors hanging. Anyone putting more capital into them is just prolonging the failure.
If the technology is there, a large investor could buy the majority stake in the company and replace the dead weight executives…if the technology is there.
It does appear that everybody thinks they can build an EV. It’s a rude awakening when they realize that an EV is still a vehicle and manufacturing it requires more than just understanding how to connect an electric motor to a battery.
That’s why Tesla didn’t make a profit for well over a decade. Building a car is hard.
With Tesla, the technology was there, and Elon can sell anything, so investments kept coming.
Exactly right, “if the technology is there” anything is possible, but in the case of Lordstown, their technology seems flawed, all around… One of their first prototypes burned to the ground within an hour of hitting the road, they failed to finish a race they entered and their projections given by management have not come true in the past, so why would you think that will change in the future? Anyone putting their money into this must have much higher risk tolerance than I do. Lordstown, Nikola, and Fisker are all nothing burgers to me until they prove otherwise.
Comparing Lordstown to Tesla is Ludicrous, Nothing is comparable. Tesla proved their technology as they went, and while they were often late with volume production, they proved their concepts in fully functional prototypes that were driven by people outside the company.
I’m pretty sure you could build this vehicle, even with the problematic hub motors they are putting in it. They aren’t attempting anything that’s impossible, except actually selling it.
Given the price they were wanting to sell this for and Ford saying they’d do basically the same for $10k less… There is just no way.
What? The EV Truck fairytale isn’t working out?
Color me shocked………………….
This deal started out based on the Workhorse line getting the postal contract. That deal went to Oshkosh.
Lordstown for the most part was a long shot as they really never had that kind of EV tech to set them apart. They lack the scale to compete with the major mfgs and they lack a charismatic leader that can get away with what ever he wants to say with Wall St.
There were few here in Ohio that expected a happy ending here.
As for the leaders. This is the way of many start ups. They expect to get paid for time rendered no matter the results. More so if tied to government funding like we have seen with many green energy start ups.
These jobs are not result based and they get away with it with investors who blindly invest.
This is not the first automaker to fail and not the last. The change to EV will bring more mergers, partnerships and failures. It will be like the early years of the auto industry where most failed and only the strongest survived.
Be aware some electronic companies will also join the fray. Some selling tech others having mfgs assemble them cars for them.
Major changes are coming.
It looks hideous. I would drive a pinto before i would drive that.
GM screwed America by placing the blazer in Mexico and ‘selling’ the lordstown complex.
GM screwed lordstown motors by dumping this huge plant in an effort to hide the huge hole created with the loss of jobs in lordstown.
The complex was valued in the hundreds of millions and they sold it for 20 million.
Huge scam going on here.
What an ugly turd. Looks like something Mary Barra would love.
Why in the world is GM investing in this unproven start-up when they have their own platform, Ultium, to make their own electric trucks. Come on GM, design your own electric pickup trucks, it can’t be that hard, you already have ICE pickup trucks and you have the Hummer EV coming out very soon. How hard can it be to translate all that knowledge into a ground-up electric pickup truck. Stop wasting stock owners money on this garbage, get your butts electrified and start designing your own.