One of the biggest contributors to EV skepticism are the companies associated with furnishing the technology. While brands like Tesla have unquestionably proven that there’s a market for electric cars, there’s a cadre of startups that seem built on a foundation of falsehoods and do nothing other than vacuum money to feed hypothetical products that never seem to manifest in the physical realm. But the problem is that it’s incredibly difficult to distinguish between them when even Tesla participates in making wild promises it clearly has no intention of keeping and is heavily dependent on regulatory issues favoring EVs — specifically via the sale of carbon credits.
Lordstown Motors has occupied a gray area between the extremes. However, it recently cut this year’s production targets by more than half, warranting some legitimate concern.
Founded in 2018 by former Workhorse CEO Steve Burns, the startup has plenty going for it. Your author has seen the factory with his own eyes, placing it ahead of many other EV startups, and has access to intellectual property we know has resulted in the construction of at least one functional electric pickup.
But it also engaged in a reverse merger with special-purpose acquisition company (SPAC) DiamondPeak Holdings last year. This resulted in a sizable estimated equity value of $1.6 billion, though the practice of backward SPAC mergers has become associated with technology entities that never end up building anything. Hindenburg Research — the infamous firm that specializes in shorting companies it doesn’t think have much to offer — claimed the company demonstrated a history of fraud in regard to demand for its products and its own ability to manufacturer trucks at a meaningful pace.
The latter claim has turned out to be undeniably true. The New York Times is reporting that Lordstown Motors has confirmed that it will make just 50 percent (or less) of the vehicles it had previously hoped to manufacture this year. Unless it can get more money, that is.
“What we are saying is that if we don’t get any funding, we might only make half of what we thought,” Lordstown’s chief executive, Steve Burns, said Monday during a conference call.
Mr. Burns said the company was still on track to begin making trucks by September.
Lordstown has had discussions with some strategic investors who could pump money into the company, he said, and it has looked into borrowing money by using its plant or other assets as collateral.
He also said the company was looking into borrowing from a federal government program meant to support the development of electric vehicles, but it was unclear if it had any funds left.
This means Lordstown would be able to produce as many as 2,200 trucks by the start of 2022 if it gets the money. If not, Burns said it probably wouldn’t even manage to build 1,000 units.
Before I go off on how EV startups frequently seem to be a clever way of lining the pockets of upper management and investment firms that help get them onto the stock market, it should be said that the entire automotive industry is tamping down production expectations this year. Lordstown is also maintaining its commitment to actually start manufacturing cars this fall, which is somewhat encouraging.
But it wasn’t sufficient in keeping everybody invested. Shares dropped 15 percent at the start of trading on Tuesday, rebounding slightly in the afternoon.
[Image: Lordstown Motors]