By on June 14, 2021

Starting a car brand has to be among the more foolhardy endeavors one can embark upon. The industry is saturated with giant, multinational companies that don’t want competition and a regulatory environment that requires a ludicrous amount of wealth and plenty of time to overcome. Despite this, we’ve seen countless electric vehicle startups attempting to accrete into something profitable over the last few years. But even the winners have found themselves wholly dependent upon government-backed. carbon-credit schemes or blank-check firms designed to guarantee their IPOs are astronomically high — often before they’ve shown a functional prototype.

This makes distinguishing a company with potential from those that are dead on arrival incredibly difficult. Though it’s getting easier to see which side of the fence Lordstown Motors will be occupying after a particularly grim string of months. One of its prototypes spontaneously combusted during testing last March, at roughly the same time Hindenburg Research was accusing it of fraud. More recently, the business lost CEO Steve Burns and confessed that it was in desperate need of money to start production. 

The company announced Burns’ departure on Monday, stating that CFO Julio Rodriguez had also left the business. Angela Strand (lead independent director) has been appointed executive chairwoman of the business and Becky Roof will take over as interim CFO. Lordstown stated that it would be seeking to replace both positions but we already know that this is likely to send the business into a protracted death spiral. It’s kind of a shame, too. Because there was a stretch where the EV startup looked to have a decent chance of becoming a real automaker — one that it was supposed to create jobs for a region of the country that undoubtedly could have used them after Chevy Cruze production ended.

Created by Steve Burns (former CEO of Workhorse Group) in 2018, Lordstown Motors shares its name after the shuttered production facility it purchased from General Motors in 2019. The deal had 40 million come from GM to underwrite a substantial part of the plant’s purchase and was followed by a $12 million agreement that allowed the company to lease some of the intellectual property associated with Workhorse’s electric pickups.

By 2020, Lordstown entered into a reverse merger with special-purpose acquisition company (SPAC) DiamondPeak Holdings, resulting in an estimated equity value of $1.6 billion. The following months were supposed to be devoted to preparing the factory for assembly but 2021 launched with plenty of bad news for the startup.

The Ohio-based company had been discussing the merits of California for some time and announced it would be opening a service center in Irvine, California. While the January announcement was noncommittal, former and current staffers started to suggest the company might relocate to the region. At the same time, Lordstown issued a press release praising California for the “favorable regulatory backdrop in the state, which is aggressively promoting more widespread adoption of electric vehicles.”

This created rampant speculation that quickly gave way to more unflattering media attention. After kicking off the year by announcing it had exceeded 100,000 pre-orders for the Endurance light-duty, all-electric pickup, Lordstown Motors became the target of Hindenburg Research. The notorious short-selling research firm released a report questioning the legitimacy of those orders and the company’s true ability to manufacturer anything by the claimed September target. The in-house battery claims also turned out to be largely fictitious and one of its prototypes ended up catching fire.

May ended with the company stating that it would be required to cut its existing production estimates, with news trailing into June about how it desperately needed more money. Now, its CEO appears to be abandoning ship as Lordstown Motors’ already crippled share price takes another 12 percent dip.

“We remain committed to delivering on our production and commercialization objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders,” stated Strang. “Along with the management team, I will continue to work closely with them and the Board to execute on Lordstown’s vision for the future of electrified transportation. I am excited to lead the passionate and dedicated team of Lordstown employees and to work with our valued customers, suppliers, investors and partners and to hosting Lordstown Week, which commences on June 21st.”

Something tells us Lordstown Week might be mildly depressing. We’re hoping we’re wrong and the company turns things around and creates a bunch of new jobs for Ohioans. But our gut is telling us to keep this one on deathwatch until after it decides whether or not it can commence production in the fall.

[Image: Lordstown Motors]

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25 Comments on “Lordstown Motors Deathwatch: EV Startup Loses CEO...”


  • avatar
    28-Cars-Later

    From the company: “Steve Burns has resigned as Chief Executive Officer and from the Company’s Board of Directors”

    So the founder is completely out, not just relegating himself to a board position as I expected. One of two things IMO: 1. he wouldn’t go along with “the suits” as-it-were because they didn’t align with his vision and he was forced out or 2. that sucker is going down hard in the near to mid term and he’s exiting now in order to sell all of his stock/stock options while they are still worth something (I would be shocked if he didn’t).

  • avatar
    Cicero

    Even assuming that Lordstown could get that “in the hub” motor thing to work reliably, who is its market? Ford announced an electric F-150 for less than what Lordstown is going to charge for its sketchy East European technology. It seems like it’s game over for that idea. And that company.

  • avatar
    Land Ark

    Siiiiiiiiiigh… I invested a decent (for me) amount of money in them about 2 months before the first investigation. I have a knack for picking losers.

    Well that’s not fair, I also have a knack of selling winners.

    • 0 avatar

      Then first make your choice but in instead of acting on it do just the opposite. If I had your talent I would be rich.

    • 0 avatar
      stuki

      “I have a knack for picking losers.

      Well that’s not fair, I also have a knack of selling winners.”

      As well as the exact opposite. And everyone does to the same degree, as well. With any divergence being mere noise.

      The only possible systematic “edge” someone has over others, is closeness to central banks, governments and insiders. Some, like You it seems; win some, lose more, as you had to work for the money put in. While others get cheap funding from The Fed. Indirectly paid for by those who, like you, don’t. That’s their edge, and their only edge. Pure redistribution.

      Any market with even the narrowest of access for “the public,” is priced efficiently enough that it never has, never will make one iota of difference in the outcome, whether Warren Buffet “invests” with the goal to “make” money, or if he specifically tries his best to lose as much as he can. At the end of enough time and enough runs, he’ll have “made”, and “lost” exactly the same amount. An amount which is solely determined by how much central banks, governments, courts and similars have redistributed his way, from others.

  • avatar
    Jeff S

    They could always make EV Vegas. Add aluminum wiring.

  • avatar
    Lynchenstein

    It looks quite dopey, which I’m sure didn’t help its chances.

  • avatar
    AthensSlim

    I read earlier today (someplace on the Internet, so you know it’s true) that Burns is still in the lockout period and can’t sell his stock until October. So although you may be right on your second point, he’s going to have to hope this thing still has value come fall to do it.

    • 0 avatar
      28-Cars-Later

      Sounds like he’s screwed… although if the stock was issued along with whatever his salary was its still essentially found money. Bonuses/stock/options etc. are never something to count on 100%, esp in the startup space.

  • avatar
    dusterdude

    Yeah , I don’t think they will escape the fate of bankruptcy. They are Too late to the game , behind the big players with an inferior (and not great looking ) product .

    • 0 avatar
      Scoutdude

      The thing is that they had the Workhorse technology which was supposed to have been out ages ago, but they decided that they would go another way and more or less start from scratch.

      Now if Workhorse had managed to bring their truck to market 2-3 years ago they might have had a shot at gaining a small niche in gov’ts that want to show their green cred and electric utilities that could power them essentially free.

      Now that Ford has the Lightning on the way and GM says there will be a EV Silverado fleet sales will be very difficult. Fleets will be much more likely to stick with those known brands and dealer networks. You also won’t be able to compete with them on price. They really don’t need to make a penny on those fleet sales when they can sell essentially the same truck to retail buyers for up to twice the price. or more.

  • avatar
    SCE to AUX

    Despite the negative comments alluding to Tesla in the first paragraph, EV startups ought to consider what factors have made Tesla successful.

    Building an electric car isn’t one of them. Lots of people are doing that, yet nobody can match their presence or brand equity.

    Government handouts aren’t really one of them, either. Considering their relative MSRPs, the 2009 Federal subsidy helped Nissan buyers a lot more than Tesla buyers, but today Nissan is trailing many others in their EV program. Besides, some mfrs like Nissan still have the subsidy available, while Tesla and even GM do not. Such subsidies, and the carbon credit scam, are available to all players.

    Hmm, what could it be?

    My answers:
    1. Courage – to go big or go home. However, there is a fine line between courage and foolishness. When you throw all your troops at the enemy, wise timing can mean the difference between victory and annihilation.

    2. Creativity – providing something people didn’t know they wanted until they saw it. Iterative design only pays next month’s bills.

    3. Commitment – when stock price and quarterly reports drive the company, you may as well produce toilet paper. You’ll never be willing to ride out 18 *years* of losses like Tesla did.

    4. CEO – the leadership of a True Believer is energizing. Most car mfrs (or companies, for that matter) lack the type of leadership that motivates people. I’ve been fortunate to have worked for a couple of real leaders who encouraged risk-taking and creativity. It is not tiring to work long hours for such people. I was even laid off under one of them, but I’d work for him again.

    I agree with the Deathwatch call. Hopefully Mr Burns and Mr Rodriguez aren’t under investigation, but methinks they were shown the door in an attempt to isolate the company from scrutiny over their governance. I bet we’ll hear more soon.

    I don’t see this turning around, and the collapse will be thunderous. Overnight, thousands of reservation holders will cancel, and the new leaders will be faced with paying the same overhead costs for a much smaller audience. A Fall start of production may never happen because the books may simply become too lopsided by then.

  • avatar
    Oberkanone

    Elio Motors

    Bremach USA

    • 0 avatar
      wolfwagen

      I really would love to see Elio and Bremach make it. But they will probably go the way of Aptera. IF Mahindra, which had decades of automotive experience couldn’t make it NA, I dont see how an upstart can. Tesla is an anomaly. All these other companies think they are the next Tesla. But they dont have a Elon Musk driving the business. See SCE to AUX comments above

  • avatar
    mcs

    ” But even the winners have found themselves wholly dependent upon government-backed. carbon-credit schemes…”

    That doesn’t apply to Tesla. At least at the present time. They could adjust if the carbon credits went away. They also have multiple factories under construction that should be done in the fall that are contributing to the cash burn.

    https://www.barrons.com/articles/tesla-haters-are-harping-on-emissions-credit-sales-investors-shouldnt-worry-51619652841

    • 0 avatar
      28-Cars-Later

      I agree, Tesla at this point would continue and possibly even grow as a result. A few years ago, maybe not but what’s past is past. I’d love to see the carbon credit fraud sunsetted and if it took down everyone but Tesla (and other established players), good because apparently they sucked and were kept afloat by artificial market distortion.

  • avatar
    Steve203

    What crossed my mind while watching the local news reporting was “who is liable for the plant?

    The plant was built in 66, before the EPA was founded. Probably quite a toxic stew under the plant. Besides tearing down the plant, who pays for site cleanup? Does GM still bear liability, or did they offload the liability when they signed it over to the EV company.

    • 0 avatar
      28-Cars-Later

      GM is probably off the hook, Federal EPA and/or Ohio equivalent (or some gov’t agency) would probably have to take possession and responsibility. I’m sure JPow can print them up a check to pay for it.

  • avatar
    wolfwagen

    What could Go wrong with a truck that looks like a GM from the side and the front end like a Pokemon Character?
    I knew this company was a joke when they started to talk about California. California is the worst place to start any kind of a business, much less a vehicle manufacturing business. Extreme environmental, safety and Labor laws not to mention the death of a thousand taxes.

  • avatar
    Imagefont

    Burns is aptly named, he leaves rubble and ashes in his wake wherever he goes. How a person with such a solid history of fraud, lies, failure and destruction of capital can get a hold of any company is beyond me. There ought to be a law…

  • avatar
    wolfwagen

    From Hindenberg Research:
    -Lordstown is an electric vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.
    -The company has consistently pointed to its book of 100,000 pre-orders as proof of deep demand for its proposed EV truck. Our conversations with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy.
    -For example, Lordstown recently announced a 14,000-truck deal from E Squared Energy, supposedly representing $735 million in sales. E Squared is based out of a small residential apartment in Texas that doesn’t operate a vehicle fleet.
    -Another 1,000-truck, $52.5 million order comes from a 2-person startup that operates out of a Regus virtual office with a mailing address at a UPS Store. We spoke with the owner who acknowledged it won’t actually order any vehicles, instead describing the “pre-order” as a mere marketing relationship.
    -Yet another firm that is supposedly set to buy 500 trucks from Lordstown told us: “…The letters of interest are non-binding. It’s not like you’d obligate yourself to a pre-order or that you would contractually bind yourself to buying this truck. That’s not what they are.”
    -Lordstown CEO Steve Burns has called these arrangements “very serious orders”. The actual customer agreements, which we present for the first time today, require no deposit and are non-binding. Many of the supposed customers do not operate fleets nor do many have the means to actually make the stated purchases.
    -Former employees and litigation records reveal that in order to raise capital and confer credibility, Steve Burns began paying consultants for every truck pre-order as early as 2016 while he was serving as CEO at Workhorse.
    -Later, heading into Lordstown’s eventual go-public transaction in 2020, a small consulting group called Climb2Glory was paid to generate pre-orders. Climb2Glory openly described the purpose behind the pre-order game: “the faster the pre-orders arrived, the greater investors’ confidence would be in the company and the faster funds would flow in.”
    -One company rep that committed to buy 40 trucks through Climb2Glory told us: “…I’m not committed to anything, not to buying a single vehicle. I committed to consider buying vehicles. I’d have a lot of questions before I commit to anything.”
    -Others had similar remarks. “The commitment of that size (15) is totally impossible,” a representative for the City of Ravenna told us about its pre-order. We document numerous other “customers” that disclaim any intent to actually purchase vehicles.
    -Multiple former senior employees who have worked with Lordstown Founder & CEO Steve Burns openly described him as a “con man”, or a “PT Barnum” figure. One senior employee told us that, while working with Steve for a couple of years, they saw more questionable and unethical business practices than they had seen in their entire career.
    -Despite being allowed to resign from Workhorse, former senior employees described how Burns was pushed out of his old company by the board for wasting R&D money and missing promised deadlines. He then launched Lordstown months later.
    -Despite claims that Lordstown will be producing vehicles by September, a former employee explained how the company is experiencing delays and making “drastic” design modifications, putting them an estimated 3-4 years away from production. For example, in mid-January the company “totally switched from a plastic exterior to aluminum,” we were told.
    Despite claims that battery packs would be manufactured in-house, we were told that the equipment is months away from arriving, let alone being put into a production environment. In the meantime, we were told that battery packs are being put together by hand.
    -Former employees also shared that the company has completed none of its needed testing or validation, including cold weather testing, durability testing, and Federal Motor Vehicle Safety Standards (FMVSS) testing required by the NHTSA.
    -In January 2021, Lordstown’s first street road test resulted in the vehicle bursting into flames 10 minutes into the test drive. We share copies of the 911 call and a police report we received through FOIA requests.
    Lordstown only went public in October 2020, but in that brief time, executives and directors have unloaded ~$28 million in stock. We think it bodes poorly when executives unload stock in a company with no actual product that claims to be on the cusp of mass-production.
    -We think investors, workers, and the local community deserve much more transparency on what is going on at Lordstown. We ask 21 questions at the end of our piece that we think the company should answer.

  • avatar

    This should be a canary in the coal mine moment for GM when it comes to electric vehicles. Many more electric car makers are going to go under. Presently, Tesla is fulfilling the demand for most of the EV market.

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