Editor’s note: This is the second-biggest story of 2021 as voted by The Vindicator.
LORDSTOWN — 2021 was a tumultuous year for Lordstown Motors Corp. and one — most of it at least — the startup electric vehicle manufacturer would like to put in its rear-view mirror.
It was Jan. 13 in a suburb of Detroit when a prototype of the company’s flagship vehicle, the Endurance truck, known in the industry as a developmental mule burst into flames on its first-ever road test. The vehicle was destroyed, and the company suffered a $150,000 property loss as a result, according to details in a fire report.
Two months later, Hindenburg Research, a firm known for short-selling stocks, released a damning report on Lordstown Motors, claiming its order book appeared to be “almost entirely fake” and the company misled investors.
The report spawned several investor-led lawsuits claiming they were misled.
On April 27, this newspaper reported Lordstown Motors skipped paying its first-half 2020 property tax payment in March and racked up a hefty penalty in doing so.
The very next day the company paid the $570,958 it originally owed to the Trumbull County Treasurer’s Office and an additional $57,095 the company was fined for nonpayment on four pieces of property it owns in Lordstown.
A company spokesman chalked up the matter to an “unfortunate administrative error.”
EXEC SHAKEUP
It was June when an executive shakeup rocked the company with the abrupt departures of founder and CEO Steve Burns and Chief Financial Officer Julio Rodriguez. No reason was given publicly for their stepping aside, however, that same day — June 14 — the company admitted inaccurate statements were made regarding preorders for the truck.
The revelation was made by a special committee formed to look into claims made in the Hindenburg report, which the committee determined were mostly false and misleading.
At one point, the company was boasting it had more than 100,000 preorders for the truck.
Burns and Rodriguez walked away with hefty severance packages — Burns was to receive $750,000 over 18 months and Rodriguez, $200,000 over six months.
Many months later in November, Burns sold off more than 3.2 million shares of his stock in the company, earning him $3.2 million. He remains the company’s largest shareholder.
Throughout the year, the company’s stock price is down 80 percent. It’s a problem that continues to dog Lordstown Motors, but there were intermittent gains over the months.
In August, the company announced the appointment of its new chief executive, Dan Ninivaggi, a veteran of the automotive industry.
In an interview with this newspaper the day he was announced — Aug. 26 — Ninivaggi said he followed the events as they unfolded with the company, but was determined to not allow them to affect the company’s future.
“They are in the past; there is a process to resolve those things,” Ninivaggi said. “I’m going to spend as much time as possible focusing on the future, getting this truck out the door and not what has happened in the past.”
PARTNERSHIP
Before his appointment, interim CEO Angela Strand in August announced the company was exploring partnerships to fully leverage the capabilities of the company’s factory, the former General Motors assembly plant in Lordstown.
Those plans became more clear at the end of September, when the company announced it had an agreement in principle with Taiwanese electronics giant Foxconn to purchase the 6.2 million-square-foot plant for $230 million.
Foxconn, well-known for making Apple’s iPhone, made an initial $100 million down payment. It has agreed to $50 million payments Feb. 1 and by no later than April 15, subject to certain conditions. The remaining balance, along with reimbursement of certain operating and facility costs incurred from Sept. 1 through closing, will be paid at closing, which is targeted for April 30.
The contract also includes the sides agreeing to pursue a contract manufacturing agreement for the Endurance that must be signed before closing and to pursue a joint venture agreement to co-design and develop vehicle programs for the global commercial fleet market.
But it also was in November when the company announced it will delay commercial production and customer delivery of the Endurance until the third quarter of 2022 due to obstacles that pushed back assembly of preproduction vehicles needed for validation and whole-vehicle approval.
The same month, President Rich Schmidt, who had been with Lordstown Motors since the beginning, resigned. He was replaced by Edward T. Hightower, who has 30 years of experience serving in product development, engineering, manufacturing, commercial and senior executive roles among Ford, BMW and GM.
Also during the year, LMC found itself the subject of a federal law enforcement investigation and an investigation by the U.S. Securities and Exchange Commission related to its October 2020 merger with special purpose acquisition company DiamondPeak Holdings.
rselak@tribtoday.com
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No. 2 story of year: Setbacks slowed Lordstown Motors momentum in 2021 - Youngstown Vindicator
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