Just a few days after troubled EV truck maker Lordstown Motors saw its top two executives resign, their replacements kept an appointment with journalists to try to provide some clarity and offer numbers to bolster company’s contention it’s not in trouble.
Angela Strand, Lordstown’s new executive chairwoman; Rick Schmidt, president; and Darren Post, chief engineer sat down with the Automotive Press Association for a virtual question-and-answer session Tuesday.
The trio revealed their plans for the company’s future — and that there is one — production plans as well as issues the team is dealing with. But the message was clear: we’re here and we’re going to build trucks starting in late September — as planned.
“It’s a new day at Lordstown,” Strand said during her opening remarks. “There are no disruptions and will be not disruptions to our day-to-day operations.”
Elephant in the room
Much of what caused then-CEO Steve Burns to ultimately resign — as well as CFO Julio Rodriguez — came from a research report issued by short-sellers Hindenburg Research. In the scathing account, the firm accused the company of exaggerating the number of orders it had for its vehicles. In fact, many were described as “fake” orders.
Dispelling that notion topped the list of things to do for President Rich Schmidt, who said the company had enough “binding” orders to keep it running for all of 2021 and through May 2022. “Those are firm orders we have for those two years,” he said.
“I don’t know the exact facts of the legal aspect of that, but they are basically binding orders that are committed here in the last two weeks, reconfirmed orders,” he said. “They’re pretty solid, and I think that’s on the light side or conservative side.”
Schmidt also confirmed production would begin, as planned, at the end of September with the first production-ready vehicle set to be delivered in 2021.
Needing more cash
He addressed the “cash crunch” the company is experiencing, saying the company has enough money to build vehicles until May 2022. He noted at that point, it will have somewhere between $25 million and $50 million left.
“We have enough to get through 2022,” he said. “We don’t have an issue with funding.”
That said, he confirmed the company was looking to drum up more money. The reason? Tooling. Right now, the company’s capacity is limited because it doesn’t have enough “hard” tooling in place to expand production capacity. Once that happens, it will improve the company’s cash generation and profitability because it will be able to get some economies of scale, especially on material costs, he said.
The company can only build 20,000 vehicles annually as the facility is currently set up, he said, adding that it will build about 15,000 truck between January 2021 and May 2022. That’s well below the expected run rate laid out in the original plan.