Canada geese wander beyond the fence Wednesday at Lordstown Motors in Lordstown, Ohio. The startup electric vehicle company that opened on the site of a former General Motors plant revealed Tuesday that it is struggling to meet its production launch goals.
COLUMBUS, Ohio — Electric-truck startup Lordstown Motors Corp., hyped as a potential savior of thousands of Youngstown-area manufacturing jobs, is now warning it might go out of business within the next year.
The company, which had already been facing questions about its viability after spending more than $500 million, notified federal regulators on Tuesday that it doesn’t have enough money to start commercial-scale production or sales of its Endurance pickup truck.
“These conditions raise substantial doubt regarding our ability to continue as a going concern” for another year, the company wrote in the filing.
In response, Lordstown Motors stated it is “currently evaluating various funding alternatives,” including issuing more debt, obtaining credit from government or private-sector sources, and making “arrangements with strategic partners.”
When asked whether Lordstown Motors will be in business in a year, company spokesman Ryan Hallett said he wasn’t authorized to speak about that.
But Hallett said the company still has enough money to continue its day-to-day operations, and it’s on track to produce about 1,000 trucks by the end of the year – half of what the company’s goal previously was.
Hallett said the company is having “active conversations” about raising enough money to produce trucks on a commercial scale. Hallett declined to comment on how much the company needs to start full-scale production, though he said there’s no timeline for raising the money.
“We’re debt-free. We have tangible assets,” Hallett said. “So that’s where we’re at.”
Lordstown Motors’ stock, which hit $30.75 a share in February, was trading for $15.50 per share on Tuesday when reports of the company’s warning emerged. That sent the stock price plummeting further to $9.30 per share on Wednesday morning, though it rebounded to about $11.30 per share by the afternoon.
Lordstown Motors has drawn lots of attention since 2019, when General Motors – under pressure from then-President Donald Trump – sold it a massive automotive assembly plant that had recently closed in the company’s namesake village, costing thousands of jobs.
A bevy of elected officials, including then-President Donald Trump and Gov. Mike DeWine, praised Lordstown Motors for saving at least a portion of the jobs lost when GM closed its plant.
JobsOhio, the state’s private economic-development nonprofit, pledged $4.5 million in grants to the company. State officials also approved $20 million in tax credits.
But the company has encountered a number of problems. Lordstown Motors initially planned to begin production in 2020, but it’s delayed that timeline in part due to the coronavirus pandemic.
Prototype vehicles performed poorly – even catching fire, in one case. The company hasn’t yet filled the union jobs to assemble its trucks, though it hired Cincinnati Bengals quarterback Joe Burrow as a celebrity spokesman and has posted job listings for an executive chef and fitness coach, according to the New York Times.
In March, a prominent investment firm betting against Lordstown Motors’ success asserted in a research report that the company “misled investors both on its demand and production capabilities.” That led to a shareholder lawsuit, as well as an investigation by the U.S. Securities and Exchange Commission.
Lordstown Motors’ plan is to market the Endurance truck to commercial customers, not individual customers. The company touted receiving 100,000 “pre-orders,” though CEO Steve Burns later acknowledged they weren’t binding orders. “I don’t think anyone thought that we had actual orders, right?” Burns said on CNBC in March.
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