LORDSTOWN, Ohio — Shares of Lordstown Motors held steady Wednesday following Tuesday’s announcement in an SEC filing that the automaker said it did not have enough cash to start commercial production this fall of the all-electric pickup Endurance, adding “these conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year,” the company wrote.
While the company reported having $587 million at the end of March, industry analysts estimate they need to raise a lot more. Joseph Spak, an analyst at RBC Capital Markets, believes Lordstown Motors (RIDE) needs $2.25 billion in additional capital to stay solvent between 2021 and 2025.
It was a year ago this month the Endurance made its debut with Vice President Mike Pence riding shotgun. Pence telling News 5 at the time this was just the start of good things for Lordstown.
“Today’s announcement of Lordstown Motors, it’s a new beginning for new jobs. This beautiful new truck will be constructed right here in this community,” Pence told News 5.
There was talk that day of one day hiring 5,000 workers. The SEC began investigating the company in March for allegedly misleading investors on the number of preorders they had received. The mayor at the time telling us he wasn’t concerned as the city was already turning to other businesses coming into the village for future growth.
“I won’t say our future relies on Lordstown Motors,” Mayor Arno Hill said.
Among those who spent their career at the plant under GM, this latest news is not a shock.
“Not surprised, not surprised at all. It has been a continuing saga with Lordstown Motors,” said retiree Dave Fenner.
As we spoke to Randy Kline about the promise of one day adding as many as 5,000 jobs, he just smiled. “We didn’t expect that from them, we just did not see the finances for them to do that sort of thing.”
In an email, Lordstown Motors Spokesperson Ryan Hallett told News 5:
"We have adequate capital to continue operations, meet supplier obligations and begin limited production, but we previously indicated that we may need to raise additional capital to support our ongoing production plan.
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.
Having said that, we are debt free, have significant tangible assets and multiple viable avenues to raise capital including asset-backed financing, equity, equity-related or debt financing, loans (including our in-process application for an ATVM loan), as well as potential strategic investments over the longer term. We are already in active conversations with multiple parties to do so."