Lordstown Motors Reverses Claims on Electric Truck Orders

Lordstown Motors Clarifies Order Status for Endurance Pickup

Recent disclosures reveal that Lordstown Motors currently lacks definitive, binding orders from customers for its Endurance electric pickup truck. This contradicts earlier statements made by company leadership this week, which were intended to bolster investor confidence.

Initial Claims and Subsequent Market Reaction

Interim CEO Angela Strand and President Rich Schmidt indicated on Tuesday, during an Automotive Press Association event, that sufficient “binding orders” existed to support limited production through May 2022. This announcement led to an increase in the company’s share value.

However, these comments followed a recent executive restructuring, including the departures of the company’s CEO and CFO.

Details of the Agreements

A regulatory filing with the U.S. Securities and Exchange Commission clarifies that the previously mentioned “binding orders” were, in reality, agreements outlining potential leases or purchases. Consequently, Lordstown’s stock price experienced a decline of over 4% following the filing’s release.

Strategic Partnerships and Non-Binding Agreements

Lordstown’s sales strategy centers on establishing relationships with companies specializing in vehicle upfitting and fleet management.

For example, in March 2021, an agreement was reached with ARI, a Holman Enterprises fleet management affiliate. This agreement stipulated that ARI would endeavor to secure orders from its leasing clients for the Endurance over a three-year period.

Similar vehicle purchase agreements have been established with other specialized firms as part of this broader strategy.

Terms of the Agreements

Despite appearing as firm commitments, these agreements contain clauses allowing termination by either party with 30 days’ notice.

The filing explicitly states that these agreements do not obligate the counterparties to actually purchase vehicles, but are considered indicators of potential demand.

Company Background and Previous Issues

Lordstown Motors originated as an offshoot of Workhorse Group, a battery-electric transportation technology company, led by former CEO Steve Burns. Workhorse currently holds a 10% stake in Lordstown Motors.

Lordstown Motors became a publicly traded company through a merger with DiamondPeak Holdings Corp., a special purpose acquisition company.

Hindenburg Research Report and Short Position

In March, Hindenburg Research, known for its report on Nikola Motor that triggered an SEC investigation, announced a short position in Lordstown Motors. This action caused a 21% drop in the company’s share price.

Hindenburg Research alleged that Lordstown Motors had misled investors regarding both demand and production capabilities, and that the company had “no revenue and no sellable product.”

Disputed Pre-Order Numbers

Hindenburg Research challenged Lordstown’s claim of 100,000 pre-orders for the Endurance, suggesting these orders were largely unsubstantiated and used to attract investment.

The firm further alleged that Steve Burns, while at Workhorse, compensated consultants for each truck pre-order as early as 2016.

Production Volume Revision

In its first-quarter earnings report, Lordstown Motors revised its projected production volume for the Endurance downward, from approximately 2,200 vehicles to just 1,000, citing funding constraints.

The recent statements by Lordstown executives were seemingly an attempt to reassure investors, but ultimately proved unsuccessful.