We’ve got more bad news about Lordstown Motors. Following several volleys of bad mojo ending with the departure of its upper management, the EV startup has informed the Securities and Exchange Commission (SEC) on Thursday that it doesn’t have any binding purchase orders or commitments.
That’s not what the company was saying several months ago. Hell, that wasn’t even what it said earlier this week when President Rich Schmidt told the Automotive Press Association the company had enough orders to support two years of production. Since the ability to sell automobiles is a somewhat relevant factor in an automaker’s long-term success, we’re getting concerned that Lordstown isn’t long for this world.
While we cannot say if the company will break its promise of delivering its all-electric Endurance pickup by September, automakers (including the well-established ones) have a habit of delaying debuts. This is especially true of EV startups and basically unavoidable among those that are never going to get off the ground — which seems to be the direction Lordstown is heading.
Despite Schmidt trying to smooth things over with investors, these SEC filings have been incredibly damning. Last week, a filing revealed that the aspiring automaker probably didn’t have sufficient capital to commence production as planned. There were even claims it might not have enough dough to remain operational. But the company specifically merged with DiamondPeak Holdings (a special purpose acquisition company) to get on NASDAQ and goose its IPO.
Thursday’s SEC documents offered more unsettling information. After explaining the importance of marketing strategy in regard to fleet management companies, it noted that it had entered into purchasing agreements that would “establish the terms and conditions of potential future purchases and other cooperation.”
It then explained the general rules they were operating under:
·Term of 3 to 5 years;
·Designation of Lordstown Motors as a preferred supplier;
·Order procedures, including forecasting, confirmation, statusing, and cancellation procedures;
·Down payment terms, which are generally 5 [percent] down 90 days prior to the requested delivery date;
·Invoicing, delivery and payment terms; and
·Other customary terms, including warranties, indemnification, intellectual property use, insurance and confidentiality terms.
These vehicle purchase agreements generally include a projected buyer order schedule over the 3 to 5 year life of the agreement, and may be terminated by either party at will on 30 days’ notice. They do not commit the counterparties to purchase vehicles, but we believe that they provide us with a significant indicator of demand for the Endurance.
To clarify recent remarks by company executives at the Automotive Press Association online media event on June 15, although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments.
That last paragraph is the most important because it’s the one where the company effectively admits to lying. Though I suppose the term “binding” could be used as a semantic defense. But this remains a bad situation since the automaker really doesn’t have anything to show for itself. There apparently aren’t any binding orders, it’s leasing the intellectual property required for the pickup from Workhorse, one of its prototypes recently burned down, and GM has an option to repurchase the facility and all transferred assets of the factory if the company cannot repay the $40 million loan and has to abandon ship.
Meanwhile, Lordstown has invited investors, analysts, and journalists to its factory next week (which had a massive solar array installed outside this year) to tour the grounds and talk about the truck. But the SEC filing stated that the company would be postponing its annual shareholder’s meeting until August 19th — which is a full month behind schedule and likely a bad omen.
[Images: Lordstown Motors]