Lordstown Endurance Truck Delivery Date Announced

Lordstown Motors Nears Endurance Production, Faces Financial Hurdles

Electric vehicle startup Lordstown Motors is progressing toward the commencement of Endurance truck production. However, initial vehicle deliveries are slated for a limited number of customers in the early months of the next year, as communicated by company executives during their second quarter earnings discussion.

Navigating Financial Realities

During the earnings call, executives adopted a measured approach, aiming to alleviate investor anxieties and address the immediate challenges of launching their first vehicle without corresponding revenue to counterbalance expenditures. A key focus for Lordstown this quarter has been the reduction of operational costs compared to the preceding period, which assisted in mitigating increased capital outlays.

The company reported a net loss of $108 million. This figure represents a 13.7% improvement over the $125 million loss recorded in the first quarter. Nevertheless, the current net losses are significantly higher – exceeding tenfold – than the $7.9 million loss reported during the same timeframe last year.

Expenditure Adjustments and Investigations

A 17% decrease in research and development spending was observed, falling to $76.5 million from the previous quarter. This reduction is attributed to the completion of major component acquisitions in earlier periods, as explained by interim CFO Becky Long during the investor call.

Conversely, capital expenditures rose from $53 million in the first quarter to $121 million. Lordstown has also revised its capital expenditure forecast for the year, increasing it from a range of $250 million to $275 million to $375 million to $400 million. This substantial increase is linked to the necessity of prepaying for essential equipment.

Legal expenses experienced a $9 million increase compared to the last quarter. This rise is a consequence of costs associated with a special committee and an investigation by the Securities and Exchange Commission regarding potential exaggerations of pre-sales figures. Further scrutiny comes from a separate investigation by the U.S. Attorney’s Office for the Southern District of New York.

Securing Financial Support

Lordstown received a financial lifeline earlier this summer through an agreement with Yorkville Advisors to purchase up to $400 million worth of the company’s shares. Interim CEO Angela Strand stated that the company is actively “exploring a variety of other financing options,” including non-dilutive private strategic investments and debt financing. Pursuit of a loan from the U.S. Department of Energy is also ongoing, according to CFO Long.

Production and Delivery Timeline

While maintaining its target for initiating Endurance production by the end of September, Lordstown anticipates delivering vehicles only to “select early customers” during the first quarter of 2022. Commercial deliveries are planned to commence in the second quarter. This phased rollout is intended to allow fleet customers sufficient time to establish charging infrastructure and address ongoing supply chain complexities.

Leveraging Manufacturing Assets

A distinguishing feature of Lordstown is its 6.2 million square foot manufacturing facility, a former General Motors plant located in Lordstown, Ohio. The company is now investigating avenues to generate revenue from this asset. “Serious discussions” are underway with potential partners regarding the utilization of the facility for their manufacturing needs, indicating a desire to diversify revenue streams and offset mounting expenses.

Strand emphasized that the company is considering “multiple partnership constructs,” including contract manufacturing and licensing agreements, alongside its own vehicle production.

Leadership Transition and Stock Performance

The past summer has presented challenges for the Lordstown executive team. In June, both CEO Steve Burns and CFO Julio Rodriguez resigned and were replaced in an interim capacity by Strand and Roof, respectively. Lordstown originated as a spin-off from Burns’ company, Workhorse Group, which has also been divesting shares, selling 11.9 million shares – nearly three-quarters of its stake – since the beginning of July. The company is currently seeking permanent CEO and CFO replacements.

Lordstown experienced a period of optimism in late 2020, following the announcement of its SPAC merger valued at $1.6 billion. Its shares peaked at $31.80 apiece. However, the stock price has since declined significantly, currently trading at $5.94.

Strand concluded by reaffirming the company’s commitment to being “first to market, particularly in the commercial fleet space.”