Lordstown Rises as Struggling EV Truckmaker Keeps Target Date
(Bloomberg) -- Shares of Lordstown Motors Corp., the embattled electric vehicle startup, rose as the company held to its plan to start limited production of its debut electric pickup in September, even as costs mount for tools, research and development.
The company said its battery line is now fully commissioned and its plant is production-ready. Lordstown, which has previously warned that it may not be able to continue as a going concern, said Wednesday it expects to have liquidity of between $225 million and $275 million in cash and cash equivalents at the end of the third quarter -- without including any funds from capital raises.
For the full year, Lordstown said capital expenditures would be between $375 million and $400 million, largely because the company is having to prepay for equipment. That’s up from the $275 million it predicted as the top of its range in its prior guidance.
The truckmaker’s shares jumped as much as 9% in after-hours trading before paring the gain to 3.2% to $5.77. The stock had fallen 72% so far this year through Wednesday’s close. Wall Street looked past a wider-than-expected loss of 61 cents per share in the second quarter.
Lordstown is one of a number of SPAC-acquired EV startups struggling to find cash and recover from events weighing on the stock. In June, Lordstown said that it may not be sustainable as a “going concern” without cash. The next month, the company confirmed it was being probed by both the U.S. Justice Department and the Securities and Exchange Commission on claims it exaggerated the number of orders for its debut truck.
Lordstown said it will take time with vehicle validation and regulatory approvals continuing to the start of next year before it begins limited deliveries to customers.
Lordstown’s debut EV, a battery-electric pickup called Endurance, will be built at a former General Motors Co. facility about 15 miles northwest of Youngstown, Ohio. President Donald Trump’s administration added to fanfare about the company’s purchase of that factory and the job prospects it meant for industrial Northeast Ohio.
“We are launching the Endurance with a prudent ramp of production given a challenging industry and supply chain landscape,” the company said in a statement. “This will be followed by deployments with selected early customers in Q1 in advance of commercial deliveries in early Q2, with the ramp steepening the second half of next year.”
Interim executives are now in place after the company parted ways in June with founder and Chief Executive Officer Steve Burns and Chief Financial Officer Juilio Rodriguez. Lordstown went public in November through a merger with special purpose acquisition company, DiamondPeak Holdings, that netted the startup $675 million.
On July 26, Lordstown reached a deal to sell as much as $400 million in stock through an equity-line-of-credit agreement with an investment fund managed by Yorkville Advisors Global, called YA II PN Ltd. The mechanism is usually deployed by smaller companies that have few other choices to raise capital but also offers Lordstown favorable terms like dictating the schedule and increments of sales.
Fellow EV startup Workhorse Group Inc. said in a regulatory filing this week that it had recorded a loss of $52.1 million after selling down 72% of the stake it held in Lordstown. Burns was former CEO of Workhorse as well.
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