Lordstown – COOPER GENERAL NEWS

The Lordstown Motors Corp. Endurance electric pickup truck sits on stage during an unveiling event in Lordstown, Ohio, U.S., on Thursday, June 25, 2020.

Matthew Hatcher | Bloomberg | Getty Images

Embattled electric truck company Lordstown Motors has enough funding to operate through May 2022 and remains on track to begin limited production of its Endurance pickup in late September following an executive shake-up that ousted the start-up’s CEO and chairman, executives said Tuesday.

The company’s new chairwoman, Angela Strand, called it a “new day” for the aspiring automaker, which raised bankruptcy concerns after warning investors last week that it had “substantial doubt” about its ability to continue as a going concern in the next year.

Shares of Lordstown Motors soared Tuesday afternoon by as much as 15% before leveling off at about $10 a share, up 8%. The company’s stock price has roughly been cut in half this year, including an 18.8% decline on Monday.

“It’s a new day at Lordstown and there are no disruptions, and there will be no disruptions, to our day-to-day operations,” Strand said during a webcast for the Automotive Press Association. “We remain committed to inspiring, building and maintaining confidence and transparency in our relationships with each other at Lordstown and, very importantly, with our customers, our partners, our suppliers and our shareholders.”

The comments come a day after Lordstown’s chairman and CEO, Steve Burns, and CFO Julio Rodriguez resigned from the company after the board released a summary of an internal investigation into claims made by short seller Hindenburg Research that Lordstown misled investors.

The company said the internal investigation found Hindenburg’s report “is, in significant respects, false and misleading.” The probe, however, did identify “issues regarding the accuracy of certain statements regarding” Lordstown’s preorders, specifically the seriousness of the orders and who was making them.

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President Rich Schmidt said the company needs more experienced leadership. And while Lordstown didn’t say the investigation led to Burns’ and Rodriguez’s resignations, he indicated the findings contributed, at least in part, to their abrupt departures. “It was a little bit of both,” he said.

Hindenburg accused Lordstown in March of using “fake” orders to raise capital for its Endurance electric pickup. The short seller said the pickup was years away from production, but Lordstown has maintained it’s on track to start making the vehicle in September. The company on Monday said customer deliveries are scheduled to begin in the first quarter of 2022.

The Securities and Exchange Commission has opened an inquiry looking at Hindenburg’s claims as well as the company’s merger with SPAC DiamondPeak Holdings. Schmidt declined to comment on inquiry.

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

Strand, who was Lordstown’s lead independent director, is overseeing its transition until a permanent CEO is identified, according to the company.

Schmidt reconfirmed Lordstown is actively raising additional capital, which the company announced plans to do in May. He also said Lordstown is no longer working with Camping World on EV products and solutions for the RV marketplace, citing a need to focus on the Endurance.

“We’re just focused currently on the Endurance truck,” he said. “That’s our next goal for the next three months is to make sure we hit our production targets and stay within our budgets and drive forward to getting the vehicles ready for the market.”

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 an electric pickup truck called the Endurance 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 also 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, which it purchased in 2019.