Lordstown Motors Has a Truckload of Woes
On Tuesday, Angela Strand, the new (as of Monday) executive chairwoman of Lordstown Motors Corp., said a few positive things about the company that aspires to make electric trucks, and boosted its stock enough for it to close up 11 percent. To understand why, you must understand the extent of Lordstown Motors’ crises.
Strand, during a webcast for the Automotive Press Association, said it was a “new day” for the company: It is on track to begin production in September and has enough funding to make it through May 2022. That’s big news, if true.
The “new day” stems from the Monday resignations of founder, CEO and chairman Steve Burns and CFO Julio Rodriguez. Strand, lead independent director, will steer the company as it searches for a new CEO. Becky Roof, from restructuring firm AlixPartners, will fill in as interim CFO.
Also on Monday, Lordstown Motors released an internal report showing that thousands of pre-orders it claimed to have from customers, including fleet companies, aren’t really real. This was an accusation made in March by Hindenburg Research, the same short-seller that earlier went after truck maker Nikola Corp.
To add to Lordstown Motors’ misery, the U.S. Securities and Exchange Commission is sniffing around, in February a prototype of its Endurance truck caught on fire and just last week it said in a securities filing it might not have enough cash to carry on (thus the significance of Strand’s comment on that).
It’s all quite the change from Lordstown Motors’ auspicious beginnings. When then-President Donald Trump attacked General Motors for shuttering a factory in Lordstown, Ohio, in 2019, the auto giant invested in the fledging EV maker, which bought the plant, reportedly with a $20 million loan from GM that it later forgave.
Last September, Burns brought a prototype of the truck to the White House for a photo op. And in October, the company went public through a reverse merger with a special-purpose acquisition company, or SPAC. (Given that Lordstown Motors is an EV outfit and a SPAC baby, one hopes its treasury holds bitcoins to complete the current-fad triathlon.)
The company has been hit with so many crises that its choices are to die or fight back. It hasn’t been all that great on the communications front, though it did put out a brief statement in March on the Hindenburg report. Strand’s comments are the first indication that it may really try to survive. And, of course, defenestrating the two top executives was smart crisis response, too.
“Management change is an important first step for the company to move forward,” the Financial Times quoted a Morgan Stanley analyst.
Image Credit: Shutterstock
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