After replacing its leadership team and delivering a series of contradictory statements about its outlook, Lordstown Motors is putting its Ohio factory on display in an effort to validate its promise to start manufacturing an electric commercial pickup truck.
The company is inviting investors, analysts, customers and suppliers to meet with the management team, tour the factory and take test drives in the truck this week “to experience firsthand how the production team is preparing the plant for the ramp up to be ready for the beginning of early production units.”
Lordstown has attracted attention because it was once hailed by President Donald J. Trump for its bid to revive an Ohio plant closed by General Motors. The plant, in Lordstown, near Ohio’s border with Pennsylvania, was closed in 2019 and purchased by Lordstown Motors for $20 million.
The start-up is one of a dozen or more electric vehicle companies that skipped the typical route for becoming publicly traded, instead gaining a stock listing and raising hundreds of millions of dollars with relatively little scrutiny by merging with a special purpose acquisition company, DiamondPeak Holdings.
Soon after the merger closed in October, Lordstown’s market value jumped to more than $4 billion. Its rise was helped by a series of announcements it made publicizing tens of thousands of “pre-orders” for its electric truck, the Endurance.
Its fortunes took a turn earlier this year when a small investment firm, Hindenburg Research, issued a report noting that almost none of the pre-orders were firm commitments to buy trucks, and some had come from small companies not currently operating truck fleets.
The company has promised to start production of the Endurance in September, but it has run into development difficulties. A prototype caught fire and burned up in a Detroit suburb in February, and another that was entered in a 280-mile off-road race in Baja California dropped out of the event after just 40 miles.
Then Lordstown’s board acknowledged some of the company’s statements about pre-orders were inaccurate, and the company filed a statement with securities regulators that it did not have enough money to start production and that it might not survive. That was followed by the resignations of its founder and chief executive, Steve Burns, and its chief financial officer, Julio Rodriguez.
Last week, Lordstown’s new president, Rich Schmidt, presented a more upbeat outlook, saying the company had enough money to last until May 2022 and that many of its pre-orders were binding agreements. Two days later, Lordstown filed another statement with the Securities and Exchange Commission saying, in effect, that Mr. Schmidt had erred and that it did not have binding orders for the truck.
In February, shortly before the Hindenburg report, a handful of executives sold about $8 million worth of stock. A few months earlier, insiders had sold $3 million worth of shares.
After a special committee of Lordstown’s board reviewed the stock sales, the company said in a statement that they “were made for reasons unrelated to the performance of the company or viability of the Endurance.”
The Wall Street Journal on Monday raised questions about the timing of the stock trades, in particular Mr. Schmidt’s sale of about $4.6 million worth of shares in early February. The Journal said Mr. Schmidt had used some of the proceeds to finance a Tennessee farm offering deer and turkey hunting, beef cattle and blueberries.
The sales took place before the company said the S.E.C. first requested information about its pre-order claims and other issues surrounding its merger with DiamondPeak.
Despite his departure from the company, Mr. Burns remains one of Lordstown’s biggest shareholders. A recent regulatory filing showed that he owned about 26 percent of the voting shares and had not sold any.
On Monday, Lordstown shares were trading slightly above $10, down from a peak of more than $31 reached in February.
If Lordstown manages to make Endurance trucks, it will probably face serious competition. Ford Motor has introduced an electric version of its F-150 pickup that is supposed to go into production this year. G.M. is working on an electric version of its Chevrolet Silverado.
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June 22, 2021 at 12:27AM
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