Report: Lordstown Motors is Just About Cooked

While maintaining it will produce the first electric truck in the US by this September, Lordstown Motors now says it needs more money to make a number of trucks. It planned on making 2,200 trucks by the end of 2021. But it announced recently it would make Endurance EV pickups “every six minutes when we start production this year.”

Lordstown says without more capital it will make less than 1,000 Endurance trucks this year

Lordstown Motors Endurance truck with Trump at press conference
Lordstown Endurance EV with Trump | Getty

Now it is saying without more capital it will make less than 1,000 Endurance trucks this year. “We are still in a position to ramp the Endurance, but we do need additional capital to execute on our plans,” CEO Steve Burns said. “We believe we have several opportunities to raise capital in various forms and have begun those discussions.”

So why has Lordstown’s outlook changed so much? According to the New York Times, it says that COVID-19 and the issues all companies are facing right now are the causes. This resulted in a “significantly higher than expected” cost of parts, shipping, and third-party engineering. It also didn’t help that Hindenburg Research, a company that famously takes short positions on EV startup companies, said the company misled the public about its capabilities.

Shorting a stock means you are betting that the stock price will fall. And you borrow shares at the higher price to buy them at the cheaper price to pocket the difference. This raised questions about Lordstown’s operations which brought in scrutiny from the SEC.

Did Lordstown use phony preorder figures to bring in new investors and sell more stock?

Endurance EV pickup | Lordstown
Endurance EV pickup | Lordstown

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Questions arose about the number of preorders Lordstown said it had received. Hindenburg said the company had highly inflated those claims. Lordstown used those preorder figures to bring in new investors and sell more stock.

“What we are saying is that if we don’t get any funding, we might only make half of what we thought,” Lordstown’s chief executive, Steve Burns, said Monday in a conference call. With all of the moving targets it is hard to determine what the outcome will be. Mostly, it paints a picture of the need for ever escalating costs and no money to draw from, while still months off form being able to produce anything.

Earlier today, its stock dropped 13.75 percent to $8.34 a share

Endurance EV pickup with Pence standing by
Endurance EV pickup | Lordstown

Burns said they are looking at using collateral like the plant itself and other assets as a means to borrow money. That should raise red flags with investors and appears to have. Earlier today, its stock dropped 13.75 percent to $8.34 a share.

“We secured a number of critical parts and equipment in advance, so we are still in a position to ramp the Endurance, but we do need additional capital to execute on our plans,” said Burns in a statement. Does that mean that there is enough capital because they are in a position to begin production? Or does it mean that in spite of securing parts and equipment Lordstown needs more capital before it can begin production?

It is becoming a puzzle of what it can do versus what it will do. But won’t it see a return on investment if it just starts production? After all of these years if it is unable to forecast what it will need and can do then what hope is there for Lordstown?