Lordstown Motors Cuts Production Estimates By More Than Half

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Renewingmind Renewingmind on May 26, 2021

    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.

  • Akear Akear on May 26, 2021

    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?

  • TCowner We've had a 64.5 Mustang in the family for the past 40 years. It is all original, Rangoon Red coupe with 289 (one of the first instead of the 260), Rally Pac, 4-speed, factory air, every option. Always gets smiles and thumbs ups.
  • ToolGuy This might be a good option for my spouse when it becomes available -- thought about reserving one but the $500 deposit is a little too serious. Oh sorry, that was the Volvo EX30, not the Mustang. Is Volvo part of Ford? Is the Mustang an EV? I'm so confused.
  • Mikey My late wife loved Mustangs ..We alway rented one while travelling . GM blood vetoed me purchasing one . 3 years after retirement bought an 08 rag top, followed by a 15 EB Hard top, In 18 i bought a low low mileage 05 GT rag with a stick.. The car had not been properly stored. That led to rodent issues !! Electrical nightmare. Lots of bucks !! The stick wasn't kind to my aging knees.. The 05 went to a long term dedicated Mustang guy. He loves it .. Today my garage tenant is a sweet 19 Camaro RS rag 6yl Auto. I just might take it out of hibernation this weekend. The Mustang will always hold a place in my heart.. Kudos to Ford for keeping it alive . I refuse to refer to the fake one by that storied name .
  • Ajla On the Mach-E, I still don't like it but my understanding is that it helps allow Ford to continue offering a V8 in the Mustang and F-150. Considering Dodge and Ram jumped off a cliff into 6-cylinder land there's probably some credibility to that story.
  • Ajla If I was Ford I would just troll Stellantis at all times.
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