Executives Declare ‘New Day’ at Lordstown Motors
YOUNGSTOWN, Ohio — In a significant reversal from dismal projections made last week and the aftershocks from the abrupt departure Monday of its two top officers, executives from Lordstown Motors Corp. struck an optimistic tone Tuesday about the company’s fortunes through next year.
“It’s a new day at Lordstown,” said Angela Strand, Lordstown Motors executive chairwoman, who assumed the role after founder and former CEO Steve Burns resigned Monday. “There are no disruptions to our daily operations.”
Chief financial officer Julio Rodriguez also resigned Monday. Both departed following an internal investigation that confirmed public statements related to preorders of Lordstown Motors’ vehicle, the Endurance, were inaccurate.
Becky Roof has been appointed as interim CFO and will serve in that position until the company completes its search for a permanent chief financial officer.
What isn’t changing, Strand said, is a firm deadline to begin a limited launch of its all-electric Endurance pickup at the end of September.
“We remain committed to inspiring, building, and maintaining confidence and transparency in our relationships with each other in Lordstown and importantly with our customers, partners suppliers and our shareholders,” Strand said.
Strand, Lordstown Motors President Rich Schmidt and chief engineer Darren Post joined a panel discussion hosted by the Automotive Press Association Tuesday. David Welch, Bloomberg’s Detroit bureau chief, moderated the discussion.
The executives said that Lordstown Motors has enough cash to last until the end of May 2022, a far brighter picture than what was painted June 8, when the electric-vehicle startup announced in a regulatory filing that it might not be able to remain in business through next year.
“We have enough funds to get us into production and into May of 2022,” Schmidt said. “We’re still raising money.”
Schmidt emphasized that orders for the Endurance are “confirmed” orders that can comfortably cover production into 2022.
“Those are firm orders for those two years,” Schmidt said. “They are basically binding orders – they are committed over the last two weeks reconfirmed orders.”
Schmidt said the company could produce about 15,000 vehicles between September 2021 and May 2022.
Shares of Lordstown Motors traded higher Tuesday, closing up 11.3% at $10.31 per share.
Confidence in the automaker reeled after short-seller Hindenburg Research published a scathing report in March that accused the company of fabricating “preorders” of the Endurance.
An independent investigation by a special committee of company directors disclosed Monday that public statements made by company officials were inaccurate in some cases, although it refuted most of the Hindenburg report related to Lordstown Motors’ ability to launch the Endurance and its technology.
As for raising more capital, Schmidt said it makes sense to approach the company’s existing partners first, one of which is General Motors. GM loaned the automaker $50 million in 2019 so it could purchase and retool its former Lordstown assembly complex. This loan, plus a $25 million cash infusion, was converted into a 4.5% equity stake in Lordstown Motors.
“It’s not our only avenue,” he said.
The company also has a parts agreement with the Detroit automaker, Schmidt said.
He added that the leadership changes at Lordstown Motors mostly resulted from the company’s transition from a research and development phase to a production phase, affirming the characterization contained in the company’s news release that announced the resignations.
A report in The New York Times says “about a dozen” other senior executives lost their jobs Monday. That report has not been independently confirmed by The Business Journal.
“Our marketing plan is the same and we’re still on the same path,” Schmidt said.
Other changes in the initial business plan result from delays related to the COVID-19 pandemic and organizing the supply chain, as well as higher costs for materials such as aluminum.
About 600 people are now employed at the company, according to Schmidt. Some 30 or so engineers work in an office in California, 150 work in another site in Michigan, while the remaining workers are staffed in Lordstown.
“We’ll have a big ramp up in the next two months,” when training begins on methods to build pre-production models of the Endurance, Schmidt said.
“The team we have here is very solid,” he added, noting that management personnel each have more than 25 years experience in the auto industry, including hybrids and EVs. “We also have good balance in GM people,” who previously worked in the Lordstown plant.
Schmidt said that apart from a single informal meeting with members of the United Auto Workers union, there have been no discussions about organizing the plant. That, he said, would be the decision of the workforce once the plant begins to produce vehicles.
One major advantage of acquiring the former GM plant is that GM had recently installed a new assembly line that would normally cost about $500 million, he continued.
Lordstown Motors’ chief engineer Post said that the Endurance’s hub-motor architecture presents less maintenance responsibility and reduces the cost of ownership for consumers.
The Endurance uses just four small hub motors in each wheel to propel the vehicle – the only moving parts on the truck.
“We are installing our own production line for our own hub motors and battery packs,” Post said. “We are testing and verifying to confirm and validate the vehicle.”
Copyright 2022 The Business Journal, Youngstown, Ohio.