Lordstown Motors Says It Needs to Raise Cash, Lowers Production Forecast
Lordstown Motors Corp.
said Monday it faces higher-than-expected costs, is cutting its 2021 production forecast by at least 50% and needs to raise more capital, as it tries to launch its electric pickup truck later this year.
The company said that without additional capital, it will finish the year with between $50 million and $75 million on hand, down from the $200 million forecast the company provided in March.
“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 having $587 million on hand at the end of the first quarter.
Shares in Lordstown Motors dropped 9% to $8.80 in aftermarket trading. The stock has fallen 52% this year, through the close Monday, amid questions about the strength of its preorders and production plans as well as increased competition from legacy auto makers.
Lordstown Motors is one of several electric-vehicle startups to go public in a rash of mergers with special-purpose acquisition companies over the past year. While investors initially saw impressive returns, shares of many have since retreated, as the startups missed targets and added costs in their earliest days as publicly traded companies.
Mr. Burns reiterated the company’s plans to begin production in September and deliver its first vehicles by the end of the year. The company didn’t have any sales in the first quarter.
The truck maker is in talks to secure more financing, Mr. Burns said, including discussions over an asset-backed financing plan and pursuit of an award through a federal loan program aimed at spurring electric-vehicle manufacturing.
“We have zero debt, and we have a lot of assets,” Mr. Burns said. “There’s folks that want to finance that.”
Lordstown reported a loss of $125.2 million in the first quarter, compared with a loss of $11.9 million for the year-earlier period. The startup said it spent about $92 million in the latest quarter on research and development expenses, up from $8.5 million in spending during the first quarter of 2020.
The company blamed the higher costs on Covid-19-related expenses and industrywide supply-chain issues that have increased prices for parts and equipment. Company executives said Monday that the company was also spending more than it anticipated on outside engineering support.
Lordstown Motors, named after the Ohio town where the company took over a closed
General Motors Co.
assembly plant, went public last November through a SPAC merger that valued the company at $1.9 billion and provided it with $675 million in funding. Lordstown’s debut model, the Endurance, is targeted at operators of commercial fleets for whom electric vehicles can lower projected fuel and maintenance costs.
In March, short seller Hindenburg Research took aim at Lordstown Motors with a report claiming the company had misled investors about the strength of its preorder reservations and progress made toward starting production.
After the report’s publication, Mr. Burns characterized it as half-truths and lies in an interview with The Wall Street Journal.
The following week, Mr. Burns opened Lordstown Motors’ first earnings call as a publicly traded entity, saying the company was cooperating with an inquiry by the Securities and Exchange Commission into its SPAC merger and preorders.
Lordstown also faces pressure from conventional auto makers like
Ford Motor Co.
, which showed off an electric version of its F-150 pickup truck last week. The lowest-priced versions of that truck will list for more than $10,000 less than Lordstown Motors’ announced price for the Endurance.
Mr. Burns said beating Ford to be first to market should provide it an advantage if it can begin production later this year as it plans. The company said Monday that the retooling of its assembly plant was nearly complete and the company had begun crash-testing the Endurance.
“We want as many people buying our vehicle while we’re the only game in town,” he said.
—Micah Maidenberg contributed to this article.
Write to Ben Foldy at Ben.Foldy@wsj.com
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Technology News Click Here