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Embattled electric vehicle startup Lordstown Motors has faced a tough week, with the company announcing it would be slashing its projected production figures from 2200 to just 1000 trucks by year’s end, reports CNBC. In the wake of the news, shares in the Ohio-based company tumbled over 9%, compounding the company’s recent struggles.
In a press release dated May 24, Lordstown CEO Steve Burns stated that the company has “encountered some challenges, including COVID-related and industry-wide related issues” in the lead up to production of the company’s Endurance electric truck later this year. The company notes the costs were largely incurred in “higher than expected expenditures for parts/equipment, expedited shipping costs, and expenses associated with third-party engineering resources,” as the company attempts to build out its production facilities. Also notable are the company’s reported losses, which stand at a whopping $125 million in the first quarter of 2021.
While Lordstown is searching for more funding to offset its spiraling costs, it may face an uphill battle. A recent 8000-word salvo fired by shortsellers Hindenberg Research suggests the company has falsified or misled investors with bogus “pre-orders” to the tune of 100,000 trucks. Executives also reportedly sold over $8 million in stock after a prototype truck burned to the ground, prior to releasing the information to the public, which predictably sent shares tumbling.
The company’s viability going forward depends virtually entirely on the successful launch and sales of its Endurance electric truck. Serving as Lordstown’s debut EV, the Endurance is claimed to have 600 horsepower, four hub motors, and a 250 mile range, all at a cost of under $55,000. The specifications are compelling, putting the Endurance in clear competition with Ford’s just-announced F-150 Lightning, and other proposed vehicles like the Tesla Cybertruck. The problem faced by the company is unlike its major rivals, it has no established manufacturing base. Given Ford sold 896,526 F-150s in 2019 alone, Lordstown have a huge production hurdle to overcome if it’s going to be more than a blip on the radar for the established king of the pickup world.
On an investor call on Monday, Burns clarified that the cut in projected production numbers is based on the company’s current financial situation, and that the company could still reach its original target of 2200 trucks if additional investment is secured. The company still intends to begin production of its first vehicle in late September this year, albeit at lower figures than initially promised. In reaching this target, the company intends to have a first-mover advantage in the EV truck segment by beating its rivals to market.
Thus far, company statements report that 48 beta vehicles of the Endurance electric truck have been built. Lordstown also reports successfully passing frontal and pole crash tests in the lead-up to production, along with vague details around the development of the manufacturing facilities for the truck’s batteries and unique hub motors. However, it’s not a whole lot of compelling evidence however that the company can meet even its limited target of 1000 vehicles from the start of production in September to the year’s end.
Often, when it comes to startup companies, where there’s smoke, there’s fire—and there’s certainly plenty of haze around the company’s operations thus far. Whether they manage to attract further funding, or indeed, meet their launch target later this year, remains to be seen.
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