- Lordstown Motors signals that continued production of its electric Endurance pickup may cease if the company is not able to find a strategic partner and further investment.
- The Ohio-based EV maker plans to produce just a few hundred units of the pickup, halting production for months following issues with parts and performance.
- The EV startup, which has partnered with electronics giant Foxconn, is currently undergoing a dispute with the Taiwanese company which was prompted by Lordstown’s stock slide, and signals that it may seek bankruptcy protection.
The Endurance pickup that entered production at the former GM factory in Lordstown, Ohio, in 2022 with help from iPhone maker Foxconn, barely made it into hundreds of units before dark clouds once again gathered over the plant. The EV maker—which faced plenty of delays and controversy prior to Foxconn’s effective bailout of its production plans with the signing of an plant purchase and operating agreement this time last year—now faces a falling out with the Taiwanese electronics giant, which has its own aspirations for EV manufacturing in the US.
The recent crisis was prompted by Lordstown stock falling below the $1 a share mark, which prompted Foxconn during the third week of April to allege a breach, following a delisting notice from Nasdaq, thus putting into limbo Foxconn’s $170 million investment agreement. The price of Lordstown Motors stock dipped below $1 in March 2023, and currently trades at $0.37.
Foxconn indicated that the deal would be terminated if Lordstown could not correct course in the span of a month, which could require a reverse stock split that could buoy the stock’s price to prevent a delisting.
The stock price drama obscures a larger issue: Lack of additional capital that could keep the Endurance in production.
“We need significant additional funding to execute our business plan. We are also seeking strategic partners, including other automakers, to provide additional capital and other support to enable us to scale the Endurance program and to develop new vehicle programs in coordination with Foxconn or otherwise,” Lordstown said in a filing.
Lordstown had indicated even months ago, however, that further production of the Endurance was entirely subject to successful raising of additional capital. Without that additional capital, the EV maker had only planned to produce and deliver only about 500 pickup trucks in 2022 and 2023.
The EV maker has focused its efforts on its direct sales model to fleets. But it has admitted that its low production levels, as well as its inability to achieve steady serial production, has dented its chances of obtaining large orders from fleets. It hasn’t helped matters that the Endurance now faces stiff competition from the Ford F-150 Lightning in the fleet business.
“To date, we have not identified a strategic partner for the Endurance,” Lordstown added. “To the extent we do not identify such a partner, we anticipate that production of the Endurance will cease in the near future.”
Lordstown now faces a very narrow path to continued Endurance production, after posting a $171.7 million net loss in the first quarter of 2023, selling only three pickups during this quarter amid a production pause prompted by performance and quality issues. The production pause lasted from early January through the middle of April.
The $171.7 million net loss itself is not that unusual in the world of EV startups, especially in the months that production first gets going. But another larger issue that remains in the background is Foxconn’s own calculus for the Endurance pickup, and the factory: Could a unique pickup truck with hub motors succeed in being marketed exclusively to fleets, without the parts support and backing of a major automaker?
On its face, the truck appears to be a boutique offering similar in packaging to Rivian’s R1T, which is a premium offering aimed largely at private buyers. Except far more Rivians have been produced to date.
The Taiwanese electronics giant already has plans for the factory, with aspirations of building Fisker models at the Ohio plant, and perhaps even its own pickup truck. But it also has to be realistic about the chances of market success of the Endurance, currently occupying production space, which during its long gestation period saw several electric pickup competitors enter production and will soon see more.
For its part, Lordstown has cited the high cost and availability of materials in producing the Endurance as one of the headwinds it faces, among others, including research and development costs incurred as a result of parts issues.
The company has openly stated that Endurance production could soon cease, even noting that it has revised its estimate of the useful life of its manufacturing assets.
“If we are unable to resolve our dispute with Foxconn in a timely manner on terms that allow us to continue operating as planned, identify other sources of funding, identify a strategic partner, and resolve our significant contingent liabilities, we may need to further curtail or cease operations and seek protection by filing a voluntary petition for relief under the Bankruptcy Code,” Lordstown also cautioned in the filing.
The company plans to vote on implementing a reverse stock split at its annual stockholder meeting on May 22. This tactic could buy it some time on Nasdaq, but it is unlikely to address underlying production and marketing issues as well as larger trends in the EV sphere, namely the rising costs of components and a sudden influx of competitor models from much larger automakers that could also cater to fleets in addition to private buyers.
Could a unique, low-volume pickup truck succeed long term in being marketed solely to fleets, or do such business customers usually prefer the backing of larger automakers? Let us know what you think.
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