(Bloomberg) — Lordstown Motors Corp. announced the abrupt departure of its two top executives and said its board found evidence of inaccurate statements, intensifying the turmoil for the electric-vehicle maker and onetime SPAC star.
Chief Executive Officer Steve Burns and Chief Financial Officer Julio Rodriguez have resigned from the company, effective immediately, the company said in a statement Monday. Burns declined to comment about his exit in a text message.
It is the latest setback for the company, which warned last week it might not have enough cash to fund development of its first truck or even survive the next 12 months if it can’t raise more capital. In March, the startup disclosed a Securities and Exchange Commission probe of its operations after a short seller said its technology was flawed and that preorders for its truck were nonbinding.
Shares of the company pared a drop of as much as 18% to trade down 15% to $9.69 as of 9:32 a.m. in New York. The stock is down about 52% this year.
Lordstown is one of a slew of electric-vehicle startups that have gone public through mergers with so-called special purpose acquisition companies, or SPACs, which have been controversial because they’ve made public companies out of young ventures with little in the way of revenue or commercially viable products. It combined with DiamondPeak Holdings in an October deal that netted Lordstown $675 million.
The company said in a separate statement that a board investigation concluded it had made misstatements about its vehicle preorders. The probe cited instances when the startup inaccurately claimed preorders came from commercial fleets, instead of from third party management companies or “influencers” that did not plan to purchase trucks directly.
It also found that some of the preorders were placed by ostensible buyers unlikely to have the resources to complete the orders or whose commitments were “too vague or infirm to be appropriately included in the total number of preorders disclosed.”
The board concluded other allegations made by short seller Hindenburg Research in March were “false and misleading” in many aspects.
Interim CEO Named
The company’s lead independent director, Angela Strand, has been named executive chairwoman, and she will oversee the company until a new CEO is identified. Becky Roof, who has previously served as an interim finance chief at other corporations, will do the same at Lordstown.
Short seller Hindenburg alleged that Burns had been forced out of his former company, electric-van maker Workhorse Group Inc. He left that company in 2019 and founded Lordstown. Burns denied Hindenburg’s allegations.
Burns’s abrupt departure and Lordstown’s finding that it made misstatements under his tenure are eerily similar to what transpired at Nikola Corp., another electric-vehicle startup that went public via a blank-check company. Nikola’s founder and CEO also stepped down after Hindenburg targeted the company for misleading investors, something the startup later confirmed.
Lordstown drew attention to itself when it acquired a shuttered General Motors Co. factory in Youngstown, Ohio, where it plans to manufacture its own vehicles. The move was lauded by President Donald Trump’s administration after he had promised to bring back work to the thousands of workers who lost jobs when the plant was closed in 2019.
The exit of Lordstown’s two top executives comes at a difficult time for the company as it attempts to transition from research and development into commercial production of its first model.
“We remain committed to delivering on our production and commercialization objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders,” Strand said in the statement.
(Updates with opening shares in fouth paragraph.)
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