Lordstown Motors has gone from the savior of Ohio to just another blowhard electric vehicle startup. Last year, it became the focus of investment research firm Hindenburg Research and an incredibly damning report that accused the company of fraudulent behavior. The paper cited thousands of non-binding, no-deposit orders and was proven right a few months later when the startup announced it didn’t actually have enough money to commence commercial production. By June, Lordstown was under investigation and losing top-ranking executive with nothing to show for itself other than a factory it purchased from General Motors at a discount where it installed a pointless solar panel array. The company said it would be selling the plant to Foxconn Technology Group (Hon Hai Technology Group) in October, along with $50 million in stock, with the plan being to make the Taiwanese firm a contract assembler for the Lordstown Endurance pickup.
It’s going to need that money too because GM is severing ties with the startup and has confirmed it offloaded its remaining stock over the holidays. While the Detroit-based automaker only held about $7.5 million worth of shares, it still represented about 5 percent of Lordstown and continued support of a business that looked to be foundering.
GM spokesperson Jim Cain told the Detroit Free Press that the shares were dumped on the open market at the end of 2021. “We were a small investor in the company, the goal was to help facilitate the sale of the plant and the restart of production,” he said.
From the Detroit Free Press:
On Monday, Lordstown Motors reported its fourth-quarter net loss widened to $81.2 million compared with a loss of $38 million in the year-ago period, as it was hit with $115 million in expenses. For the full year, the startup reported a $410 million loss compared with 2020’s year-end loss of $102 million, though leaders promised it would start limited production of its Endurance electric pickup later this year.
Last fall, Lordstown Motors entered talks to sell the former GM facility to iPhone maker Foxconn for $230 million. The deal is not done, but it will help Lordstown Motors raise the money to launch and grow Endurance sales, said Lordstown CEO Dan Ninivaggi. Lordstown would lease space.
“This is one of the most challenging situations I’ve seen, but I knew it when I was coming in,” Ninivaggi told Wall Street analysts Monday. “I’m maniacal, maniacal about getting this done. It’s going to be about talent and our ability to execute. Scale matters a lot in this industry. You’re going up against big players. So we’re trying to be smart about that. I’ve said early on, ‘We’re all in on Foxconn,’ but we need to prove out the benefits of that relationship and it’s got to be a win-win.”
Lordstown is said to have enough money to operate through 2022. But CFO Adam Kroll believes it needs to finalize its deal with Foxconn and drum up another $250 million if it expects to achieve any “long-term viability.”
The company has endured numerous setbacks and continued suggesting it needs more cash to reach a point where it can deliver all-electric products with any regularity. Originally, the plan was to assemble 2,000 pickups over the launch period and average 32,000 units through its first full year of production — with the Endurance starting at $52,500.
Lordstown now believes it can field 500 Endurance pickups by the end of 2022 and build “up to” 2,500 trucks next year — they’ll be starting at $63,500.
“We feel that our value proposition for the Endurance, plus the economics and availability of battery-electric, full-size pickups in the market right now really justifies our price point,” President Edward Hightower explained to analysts. “We’re launching the vehicle with a significant amount of standard options.”
Perhaps. But the company is losing ground to established manufacturers that are all on the cusp of delivering all-electric trucks of their own. Had the Endurance commenced production in 2020 as originally planned, Lordstown could have dunked on everybody. Now, limited quantities will be forced to compete with the Rivian R1T, GMC Hummer EV, and Ford F-150 Lightning the second they leave the factory… if they leave the factory. And more competition is coming, often with greater towing capabilities and better range than Lordstown is offering.
It’s no secret that starting a car company is a grueling, borderline impossible proposition. The industry typically rejects newcomers and legacy manufacturers are often aided (unwittingly or not) by regulatory laws that are extremely difficult/expensive for smaller entities to comply with. But these EV startups often seem to be financial black holes by design, exclusively benefiting those who got in early and bailed before the brand image becomes forever tainted. It’s hard to say if Lordstown is one of those with any real certainty. But the business certainly seems to have grossly oversold its own production capabilities and is now suffering as a result.
The company still needs to decide upon a joint-vehicle development platform with Foxconn before their deal is finalized. Lordstown wants something for North America and Foxconn is seeking an overarching EV platform it can sell globally. Without it, there is no factory sale or backward leasing arrangement to ensure the Endurance gets manufactured.
“It’s certainly possible that we don’t conclude an agreement, but it’s highly unlikely,” Ninivaggi said. “Conversations have been ongoing. If we get to a point where we can’t get a joint development agreement … we’ll have to consider other alternatives but we’re not at that point yet.”
[Image: Lordstown Motors]
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