By on May 25, 2021

One of the biggest contributors to EV skepticism are the companies associated with furnishing the technology. While brands like Tesla have unquestionably proven that there’s a market for electric cars, there’s a cadre of startups that seem built on a foundation of falsehoods and do nothing other than vacuum money to feed hypothetical products that never seem to manifest in the physical realm. But the problem is that it’s incredibly difficult to distinguish between them when even Tesla participates in making wild promises it clearly has no intention of keeping and is heavily dependent on regulatory issues favoring EVs — specifically via the sale of carbon credits.

Lordstown Motors has occupied a gray area between the extremes. However, it recently cut this year’s production targets by more than half, warranting some legitimate concern. 

Founded in 2018 by former Workhorse CEO Steve Burns, the startup has plenty going for it. Your author has seen the factory with his own eyes, placing it ahead of many other EV startups, and has access to intellectual property we know has resulted in the construction of at least one functional electric pickup.

But it also engaged in a reverse merger with special-purpose acquisition company (SPAC) DiamondPeak Holdings last year. This resulted in a sizable estimated equity value of $1.6 billion, though the practice of backward SPAC mergers has become associated with technology entities that never end up building anything. Hindenburg Research — the infamous firm that specializes in shorting companies it doesn’t think have much to offer — claimed the company demonstrated a history of fraud in regard to demand for its products and its own ability to manufacturer trucks at a meaningful pace.

The latter claim has turned out to be undeniably true. The New York Times is reporting that Lordstown Motors has confirmed that it will make just 50 percent (or less) of the vehicles it had previously hoped to manufacture this year. Unless it can get more money, that is.

From NYT:

“What we are saying is that if we don’t get any funding, we might only make half of what we thought,” Lordstown’s chief executive, Steve Burns, said Monday during a conference call.

Mr. Burns said the company was still on track to begin making trucks by September.

Lordstown has had discussions with some strategic investors who could pump money into the company, he said, and it has looked into borrowing money by using its plant or other assets as collateral.

He also said the company was looking into borrowing from a federal government program meant to support the development of electric vehicles, but it was unclear if it had any funds left.

This means Lordstown would be able to produce as many as 2,200 trucks by the start of 2022 if it gets the money. If not, Burns said it probably wouldn’t even manage to build 1,000 units.

Before I go off on how EV startups frequently seem to be a clever way of lining the pockets of upper management and investment firms that help get them onto the stock market, it should be said that the entire automotive industry is tamping down production expectations this year. Lordstown is also maintaining its commitment to actually start manufacturing cars this fall, which is somewhat encouraging.

But it wasn’t sufficient in keeping everybody invested. Shares dropped 15 percent at the start of trading on Tuesday, rebounding slightly in the afternoon.

[Image: Lordstown Motors]

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16 Comments on “Lordstown Motors Cuts Production Estimates By More Than Half...”

  • avatar

    Lucid motors is behind schedule as well. Even Musk was late. I think you have to over promise these things in the beginning to attract investors. Weather you are serious or not.

  • avatar

    Between the SPAC and the sketchy backhanded arrangement backed by the Trump administration over the GM plant, Lordstown has always reeked of being a few shades away from being a vaporware scam.

    With the F-150 Lightning on the way, it’s basically assured that this has approximately 0% chance of being viable in its current iteration.

  • avatar

    If that’s an actual prototype, it’s the ugliest one in the world. Soon, just wait, they’ll cut the other 50%.

  • avatar

    There “technology” is based on an electric motor on each wheel (which has never been successfully commercialized). The first prototype burned up in flames a few months ago and it was publicized. I’d love to know the compensation of the CEO.

    • 0 avatar

      “I’d love to know the compensation of the CEO.”

      Ask and you shall receive (Seek, and ye shall find):

  • avatar

    If Ford can actually deliver a $40,000 pickup truck with a 230 mile range then Lordstown and Rivian have zero chance. Ford may not be perfect but they do, actually manufacture boat loads of vehicles. I see Tesla Model 3’s all over the place. If you can afford to indulge yourself in a Tesla you don’t need, imagine the pickup truck you don’t need that’s can do a heck of a lot more just in case you decide to do something! You might not be taking road trips but there are a lot of people with disposable income who drive mostly around town, for whom these vehicles are discretionary purchases.

    • 0 avatar

      Correct. These start ups aren’t writing smart phone apps, they are trying to build vehicles. Turns out that vehicle production is super complicated and profits are hard to come by. Build a dealer network? Service centers? This is a massive undertaking – where, based on history, very few can make it work.

  • avatar

    Had they blamed the microchip shortage, nobody would have batted an eye.

  • avatar

    No one is better at copying competition than FORD…the design of their entire lineup could be derived from a single trip to the UK…plus a Tesla.

    They simply lost the race…

  • avatar

    They sure have a big factory, with a bunch of solar panels out front.

  • avatar

    People competent enough to do anything useful, shut up and let the stuff they build, and the prices they are able to sell them profitably for, without harebrained “credits” and other nonsense, do the talking.

    Only incompetents too dumb to do that, work in “fiiinaance” and other special-ed excuses for an out-of-control totalitarian state to rob their betters on their behalf.

  • avatar

    I’ve been operating with the assumption that Lordstown Motors was nothing more than a scam, yet have to admit that I was surprised to drive by the factory and see 100+ cars in the parking lot. SOMEBODY is in there on a weekday. I can’t imagine they are just playing laser tag.

    But I agree, if the F-150 lightning ships the startups are doomed. Pretty confident that Ford will be around to handle warranty claims. Lordstown? Not so much.

  • avatar

    Let’s be brutally honest, Lordstown motors will eventually go out of business like most electric car makers that are not Tesla. Maybe they can build a few thousand vehicles a year before they go under.
    How is Nikola doing? Has their crook CEO left the country yet?

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