Ohio-based Lordstown Motors surprised investors and potential customers alike on Tuesday afternoon with a going-concern notice—essentially declaring that without additional capital, it won’t have enough money to ramp up production of its Endurance electric trucks.
In last month’s call with investors, Lordstown Motors CEO Steve Burns noted that the company still had the funds and the progress to keep to its September 2021 start of production, but with a slower ramp of its Lordstown Endurance electric trucks from 2,200 planned by the end of the year down to 1,000.
Lordstown had stated that with the slower ramp the company would enter 2022 with $50 million to $75 million on hand. The argument for additional investment centered around the idea that the recent reveal of the Ford F-150 Lightning validated Lordstown's business model, and that it needed to seize the moment.
Lordstown Motors CEO Steve Burns in assembly plant
With formality of the Amended Form 10-K/A filed Tuesday, Lordstown spells out a high likelihood of financial difficulties, noting: “Additional funding is needed for production in 2022 and beyond and to continue our ramp up to full commercial production. The amounts required may be significant.”
It later summarizes: “The Company believes that our current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles.”
The company, which is under an SEC probe for some of its statements about orders, noted in the May documents that it was seeking additional funding, including a U.S. DOE ATVM loan. Responding to questions from several analysts at the time, Lordstown insisted it would be able to deliver vehicles whether it did or not.
Preceding a long list of risks, which are to be expected in such a document, it revealed several other details with the Tuesday filing. Among them: it still considers the vehicle under development, and that it hasn’t yet secured supply agreements for all of its components.
Lordstown, in a statement to Green Car Reports, clarified that the situation has not changed in the past week or two. "We have adequate capital to continue operations, meet supplier obligations and begin limited production," said a company spokesperson. "The update we provided on our most recent earnings call—and in yesterday’s updated SEC filing—indicated that increased R&D spending due to COVID-related supply chain issues and the strategic decision to in-source production of certain parts simply means we now have confirmed that we will need that additional funding in the near term to ramp to commercial production levels."
Although Lordstown might see the filing as a formality, it raises questions about the company's viability, out in the open, that might potentially still be moot if it succeeds in raising next-step capital.
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This piece was originally published on Tuesday 6/8. On Wednesday 6/9 it was updated to include a statement from Lordstown Motors.
