Lordstown Deathwatch: Another Unflattering SEC Filing Emerges

Matt Posky
by Matt Posky

We’ve got more bad news about Lordstown Motors. Following several volleys of bad mojo ending with the departure of its upper management, the EV startup has informed the Securities and Exchange Commission (SEC) on Thursday that it doesn’t have any binding purchase orders or commitments.

That’s not what the company was saying several months ago. Hell, that wasn’t even what it said earlier this week when President Rich Schmidt told the Automotive Press Association the company had enough orders to support two years of production. Since the ability to sell automobiles is a somewhat relevant factor in an automaker’s long-term success, we’re getting concerned that Lordstown isn’t long for this world.

While we cannot say if the company will break its promise of delivering its all-electric Endurance pickup by September, automakers (including the well-established ones) have a habit of delaying debuts. This is especially true of EV startups and basically unavoidable among those that are never going to get off the ground — which seems to be the direction Lordstown is heading.

Despite Schmidt trying to smooth things over with investors, these SEC filings have been incredibly damning. Last week, a filing revealed that the aspiring automaker probably didn’t have sufficient capital to commence production as planned. There were even claims it might not have enough dough to remain operational. But the company specifically merged with DiamondPeak Holdings (a special purpose acquisition company) to get on NASDAQ and goose its IPO.

Thursday’s SEC documents offered more unsettling information. After explaining the importance of marketing strategy in regard to fleet management companies, it noted that it had entered into purchasing agreements that would “establish the terms and conditions of potential future purchases and other cooperation.”

It then explained the general rules they were operating under:

·Term of 3 to 5 years;

·Designation of Lordstown Motors as a preferred supplier;

·Order procedures, including forecasting, confirmation, statusing, and cancellation procedures;

·Down payment terms, which are generally 5 [percent] down 90 days prior to the requested delivery date;

·Invoicing, delivery and payment terms; and

·Other customary terms, including warranties, indemnification, intellectual property use, insurance and confidentiality terms.

These vehicle purchase agreements generally include a projected buyer order schedule over the 3 to 5 year life of the agreement, and may be terminated by either party at will on 30 days’ notice. They do not commit the counterparties to purchase vehicles, but we believe that they provide us with a significant indicator of demand for the Endurance.

To clarify recent remarks by company executives at the Automotive Press Association online media event on June 15, although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments.

That last paragraph is the most important because it’s the one where the company effectively admits to lying. Though I suppose the term “binding” could be used as a semantic defense. But this remains a bad situation since the automaker really doesn’t have anything to show for itself. There apparently aren’t any binding orders, it’s leasing the intellectual property required for the pickup from Workhorse, one of its prototypes recently burned down, and GM has an option to repurchase the facility and all transferred assets of the factory if the company cannot repay the $40 million loan and has to abandon ship.

Meanwhile, Lordstown has invited investors, analysts, and journalists to its factory next week (which had a massive solar array installed outside this year) to tour the grounds and talk about the truck. But the SEC filing stated that the company would be postponing its annual shareholder’s meeting until August 19th — which is a full month behind schedule and likely a bad omen.

[Images: 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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  • Wolfwagen Wolfwagen on Jun 21, 2021

    Latest news: Executives sold millions of dollars worth of stock in February before Lordstown earning report. Fecal matter meet air moving device Stick a fork in Lordstown, they are finished (the company and the area)

  • Mustangfast Mustangfast on Jun 21, 2021

    I don’t think much could be less flattering than that grill…also for solar panels, they are typically leased and offset electricity costs, so probably wasn’t a capital expense no matter who installed them

  • ToolGuy This is the kind of thing you get when you give people faster internet.
  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
  • Carson D The UAW has succeeded in organizing a US VW plant before. There's a reason they don't teach history in the schools any longer. People wouldn't make the same mistakes.
  • B-BodyBuick84 Mitsubishi Pajero Sport of course, a 7 seater, 2.4 turbo-diesel I4 BOF SUV with Super-Select 4WD, centre and rear locking diffs standard of course.
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