Steve Burns, Chief Executive of Lordstown Motors Corp., poses with a prototype of the endurance pickup truck from the electric vehicle start-up, which will be built in the second half of 2021 at the company’s facility in Lordstown, Ohio, USA, on June 25th 2020 will begin.
Lordstown Motors | Reuters
Lordstown Motors’ shares fell more than 9% during off-hours trading after the company cut its production guidance for the year and announced it would need to raise additional capital.
In a statement Monday, Lordstown CEO Steve Burns said the company “encountered some challenges” as it prepared to begin production of an electric pickup truck called Endurance in late September.
Lordstown said it expects to produce at best half of the vehicles previously forecast for this year, according to a first-quarter earnings release.
Speaking to investors on Monday, Burns said the cut in production from about 2,200 vehicles to 1,000 vehicles this year is due to the company not getting any additional funding. He said if the company receives funding it could resume its previous production policies.
Lordstown also said its planned spending will range from $ 335 million to $ 350 million, from $ 220 million to $ 235 million. The year-end liquidity forecast has been reduced from a minimum of $ 200 million to $ 50 million to $ 75 million in cash and cash equivalents.
Burns cited “significantly higher than expected parts / equipment expenses, expedited shipping costs, and third-party technical resource expenses” as reasons for the increase in spending.
“We backed up a number of critical parts and equipment in advance so we will still be able to increase endurance, but we will need additional capital to implement our plans,” he said. “We believe we have multiple ways to raise capital in different forms and we started these discussions.”
The changes are the latest blow to Ohio’s Lordstown. The aspiring automaker’s shares fell last week after Wolfe Research downgraded the stock to underperform after the debut of the Ford F-150 Electric Pickup, a competitor to Lordstown Endurance, with a target price of $ 1.
Without naming Ford, Burns said EV pickups are more mainstream after a “turning point” last week. He said Lordstown still has a first mover advantage. Ford’s electric F-150 is expected to go into production next spring.
“We’re on par with someone like that at this point and we’re getting to market faster,” he said. “We want so many people to buy our vehicle while we’re the only game in town. We want to be on version 2.0 when someone releases version 1.0.”
In March, Lordstown also confirmed that the US Securities and Exchange Commission had requested information on claims made by short seller Hindenburg Research that it had misled investors.
Hindenburg accused Lordstown in a March report of using “wrong” orders to raise funds for the Endurance. The short seller claimed the pickup was years away from production; However, Lordstown claims it is on track to build the vehicle in September.
Burns on Monday reiterated that the company will continue to work with the SEC.
Lordstown went public in October through a special purpose vehicle (SPAC). It is one of a growing group of electric vehicle startups going public through contracts with SPACs. These are a popular way to raise money on Wall Street as they have a tighter regulatory process than traditional IPOs.
The company plans to manufacture the Endurance at General Motors’ former Lordstown Assembly facility in Ohio, which it purchased in 2019.
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