Lordstown cuts 21 manufacturing plans, says extra capital is required
Steve Burns, Chief Executive of Lordstown Motors Corp., poses with a prototype of the endurance pickup truck from the electric vehicle start-up, which will be built in the second half of 2021 at the company’s facility in Lordstown, Ohio, USA, on June 25th 2020 will begin.
Lordstown Motors | Reuters
Lordstown Motors’ shares fell more than 9% during off-hours trading after the company cut its production guidance for the year and announced it would need to raise additional capital.
In a statement Monday, Lordstown CEO Steve Burns said the company “encountered some challenges” as it prepared to begin production of an electric pickup truck called Endurance in late September.
Lordstown expects to produce at best half the vehicles previously forecast for this year. The planned spending will be between $ 335 million and $ 350 million, up from $ 220 million and $ 235 million. The year-end liquidity forecast has been reduced from a minimum of $ 200 million to $ 50 million to $ 75 million in cash and cash equivalents.
Burns cited “significantly higher than expected parts / equipment expenses, expedited shipping costs, and third-party technical resource expenses” as reasons for the increase in spending.
“We backed up a number of critical parts and equipment in advance so we will still be able to increase endurance, but we will need additional capital to implement our plans,” he said. “We believe we have multiple ways to raise capital in different forms and we started these discussions.”
The changes are the final blow to Lordstown. The aspiring automaker’s shares fell last week after Wolfe Research downgraded the stock to underperform after the debut of the Ford F-150 Electric Pickup, a competitor to Lordstown Endurance, with a target price of $ 1.
In March, Lordstown also confirmed that the US Securities and Exchange Commission had requested information on claims made by short seller Hindenburg Research that it had misled investors.
Hindenburg accused Lordstown in a March report of using “wrong” orders to raise funds for the Endurance. The short seller claimed the pickup was years away from production, but Lordstown claims it is on track to produce the vehicle in September.
Lordstown went public in October through a special purpose vehicle (SPAC). It is one of a growing group of electric vehicle startups going public through contracts with SPACs. These are a popular way to raise money on Wall Street as they have a tighter regulatory process than traditional IPOs.