Lordstown Motors Corp Chief Executive Steve Burns poses with a prototype of the electric vehicle start-up’s Endurance pickup truck, which it will begin building in the second half of 2021, at the company’s plant in Lordstown, Ohio, U.S. June 25, 2020.
Lordstown Motors | Reuters
Shares of Lordstown Motors tumbled more than 9% during after-hours trading after the company slashed its production guidance for the year and said it will need to raise additional capital.
In a statement Monday, Lordstown CEO Steve Burns said the company has “encountered some challenges” as it prepares to begin production of its Endurance electric pickup truck in late September.
Lordstown said it expects to produce, at best, half the number of vehicles it previously forecast for this year, according to a release for its first-quarter earnings.
During a call Monday with investors, Burns said the production cut, from about 2,200 vehicles to 1,000 vehicles this year, is based on the company not receiving any additional funding. He said if the company receives funding, it could reinstate its previous production guidance.
Lordstown also said its projected expenses will be between $335 million and $350 million, up from between $220 million and $235 million. It also lowered its forecast for year-end liquidity from at least $200 million to between $50 million and $75 million in cash and cash equivalents.
Burns cited “significantly higher than expected expenditures for parts/equipment, expedited shipping costs, and expenses associated with third-party engineering resources” as reasons for the increase in expenses.
“We secured a number of critical parts and equipment in advance, so we are still in a position to ramp the Endurance, but we do need additional capital to execute on our plans,” he said. “We believe we have several opportunities to raise capital in various forms and have begun those discussions.”
The changes are the latest blow to Ohio-based Lordstown. Shares of the aspiring automaker tumbled last week after Wolfe Research downgraded the stock to underperform with a $1 price target following the debut of the Ford F-150 electric pickup, a competitor to the Lordstown Endurance.
Without naming Ford, Burns said EV pickups are more mainstream following a “watershed moment” last week. He said Lordstown continues to have first-mover advantage. Ford’s electric F-150 is expected to go into production next spring.
“We are on par with somebody like that at this point, and we’re getting to market faster,” he said. “We want as many people buying our vehicle while we’re the only game in town. We want to be on version 2.0 when somebody comes out with version 1.0.”
In March, Lordstown confirmed the U.S. Securities and Exchange Commission had requested information regarding claims by short seller Hindenburg Research that it misled investors. Hindenburg accused Lordstown in a March report of using “fake” orders to raise capital for the Endurance. The short seller claimed the pickup was years away from production; however, Lordstown maintains it’s on track to start making the vehicle in September.
Burns on Monday reiterated the company is continuing to cooperate with the SEC.
Lordstown went public through a special purpose acquisition company, or SPAC, in October. It is among a growing group of electric vehicle start-ups going public through deals with SPACs, which have become a popular way of raising money on Wall Street because they have a more streamlined regulatory process than traditional initial public offerings.
The company plans to produce the Endurance at General Motors’ former Lordstown Assembly plant in Ohio. Lordstown Motors purchased the plant in 2019.