Less than a week after Ford Motor Co. rolled out its first electric pickup amid much fanfare and across the internet, just the opposite was the case for Lordstown Motors as CEO Steve Burns cut the company’s 2021 production forecast.
Burns revealed the news to investors and analysts on the company’s first-quarter earnings call. He also noted the company also needs to raise additional capital.
These two major items come as the company attempts to meet its predicted September launch period. He noted that if additional funding doesn’t come, it will leave the EV startup dangerously low on cash — between $50 million and $75 million instead of the $200 million expected — by the end of the year.
“Capital may limit our ability to make as many vehicles as we would like,” said Steve Burns, Lordstown’s chief executive, on a call with analysts. “We wanted to make sure everybody knew the worst, worst case.”
The company reported cash on hand of $587 million in its Q1 filing with the SEC. Unsurprisingly, the company’s stock price fell in aftermarket trading. It closed Monday at $9.67 a share, then dropped overnight to open at $8.17 Tuesday. It closed Tuesday at $8.95, which was 7.5% off Monday’s closing price. Overall, the stock has taken a beating this year, dropping 52 percent.
Company facing plenty of trouble
The company’s facing a slew of legal issues, including multiple lawsuits from shareholders who, in the wake of a devastating research report by noted short-seller research firm Hindenburg Research, want to be compensated out of the funds the company now says it will be short on by the end of the year.
Hindenburg Research claimed the EV truckmaker either faked or overstated claims that it has advance orders for 100,000 of the electric pickups it plans to launch later this year.
“Lordstown is an electric vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities,” Hindenburg said in the report.
Hindenburg’s report raised numerous questions about the status of the Endurance program and the sales numbers Lordstown claims, it took direct aim at CEO Burns. The report cites unnamed current and former Lordstown employees who, among other things, dubbed Burns a “con man,” and likened him to P.T. Barnum, the legendary circus owner and scam artist.
CEO attempts to allay investor fears
Burns, who has essentially downplayed all of the charges leveled at him and the company, assured investors during the call that production plans were still on track to begin in September with delivery of its first vehicles at the end of this calendar year.
He also noted the company is in talks to secure additional funding through a federal loan program specifically for nascent electric vehicle companies. Additionally, Burns said they are looking to secure some asset-based financing, but declined to say how much funding they would be seeking. He felt optimistic that the company would be able to get the financing.
“We have zero debt, and we have a lot of assets,” Burns said, according to the Wall Street Journal. “There’s folks that want to finance that.”
The company, which had no sales, of course, reported a loss of $125.2 million in the first quarter, $92 million of that was research and development expenses, compared to the $8.5 million spent on the same during the year-ago period.