Lordstown Motors Chief Executive Officer Steve Burns has resigned from the struggling electric vehicle startup, as has Chief Financial Officer Julio Rodriguez.
The departures come just days after the Ohio-based company warned there was “substantial doubt” it would have enough money to remain in business for the next year. The company also faces an investigation by the U.S. Securities and Exchange Commission into claims that it misled investors.
Lordstown said Monday Angela Strand, its lead independent director, was appointed to serve as its executive chairwoman. A search will now begin for a permanent replacement for Burns. Separately, Becky Roof was named interim finance chief for the company.
“We remain committed to delivering on our production and commercialization objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders,” Strand said in a statement. “Along with the management team, I will continue to work closely with them and the Board to execute on Lordstown’s vision for the future of electrified transportation.”
Drawing from history to kick off the future
Lordstown is one of numerous new companies targeting the electric vehicle sector. The company draws its name from the Ohio town in which its factory is based. It acquired the plant from General Motors, which once produced small cars like the Chevrolet Cruze there.
Lordstown’s goal has been to produce an all-electric pickup using novel in-wheel “hub” motors. It was emphasizing sales to fleets and, until a few months ago, claimed to have lined up thousands of advance orders for the vehicle, named Endurance.
It used its claimed success to help pull together financing and a deal to go public as part of a merger with DiamondPeak Holdings, a special purpose acquisition company, or SPAC. At peak, its stock price surged to $31.80 a share. It closed Friday at $11.41.
Shares dropped in aftermarket trading after word of the resignations was released.
It all began with a report
Things began to crumble in March when the short-seller group, Hindenburg Research released a report questioning Lordstown’s optimistic sales projections. According to Hindenburg, the “fake” orders were used to help Lordstown raise capital. It has since come out that most, if not all, of the automaker’s sales claims are questionable.
The SEC probe was announced shortly after the study was released. TheDetroitBureau.com has spoken to several of the companies Lordstown claimed were placing orders. It was told by several that they were, in fact, planning to purchase some Endurance pickups but had not yet finalized plans.
Lordstown has repeatedly said it plans to begin production of the Endurance this year — though Hindenburg’s report alleged that this wouldn’t happen for at least several years. What seems clear now is that the company doesn’t have the money to follow through.
“Our ability to continue as a going concern is dependent on our ability to complete the development of our electric vehicles, obtain regulatory approval, begin commercial scale production and launch the sale of such vehicles,” it said in a 10Q filing with the SEC last week.
This is the second automotive startup that the short-seller has targeted during the last year. It initially took aim at Nikola Motors, an Arizona-based company planning to bring hydrogen-powered trucks to market. After alleging he misled investors, Nikola’s chairman and founder Trevor Milton also resigned.
Despite the management shakeup, Lordstown said it still plans to participate in a presentation to the Detroit Automotive Press Association this week, as well as meeting of investors at its Ohio plant next week.