(Bloomberg) — Lordstown Motors Inc., an electric-vehicle startup that recently went public, may not have enough cash to get its debut pickup truck to market and might not survive the next 12 months if it can’t raise more more capital.
“The company believes that its current level of cash and cash equivalents are not sufficient” to complete the development of its electric vehicles and launch the Endurance pickup, Lordstown said in the filing Tuesday.
Lordstown is one of dozens of startups that have gone public in the past 18 months by merging with so-called blank check companies, known as special purpose acquisition companies, or SPACs. Some, like Nikola Corp. and Velodyne Lidar Inc., have had their founders ousted. Lordstown is the first to say it’s running low on cash.
Shares of Lordstown fell as much as 12% in extended trading to $9.90 after the filing. The stock lost 16% to $11.22 at the close of regular trading Tuesday in New York.
The announcement marks the latest setback for Lordstown, which in March disclosed a Securities and Exchange Commission probe of its operations. As recently as a year ago, the startup, which operates out of a shuttered General Motors Co. plant in Ohio, was lauded by former President Donald Trump’s administration as part of its drive to create manufacturing jobs.
The filing follows comments by Chief Executive Officer Steve Burns on the company’s first-quarter earnings call last month that Lordstown needs to raise more money to fund the development of its Endurance pickup.
Cash Balance
In the filing, Lordstown said it has approximately $587 million in cash and an accumulated deficit of $259.7 million as March 31, after reporting a first-quarter net loss of $125.2 million.
As a result of the cash crunch, Lordstown is “evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions.”
The company said it can’t guarantee money can be raised on favorable terms.
Lordstown went public when it merged with DiamondPeak Holdings, in an October deal that netted the startup $675 million. The company had no revenue and hadn’t completed production versions of the Endurance yet.
The company is trying to build a unique electric pickup — with a motor at each wheel. The unique nature of the truck makes it an engineering challenge. The company was working with Elaphe Propulsion Technologies of Slovenia for the motors.
Short Seller
Lordstown was attacked by short seller Hindenburg Research in March with allegations that its technology was flawed and that pre-orders for its truck were nonbinding. The report also said Burns had been forced out of his former company, electric-van maker Workhorse Group Inc. He left that company in 2019 and founded Lordstown Motors.
If the company fails, it will be another dark chapter in the decline and fall of GM’s former small-car plant in Lordstown. GM had been cutting production over several years as compact cars went out of favor. The plant was idled in 2019 and sold to Lordstown Motors.
President Trump assailed GM CEO Mary Barra over the closure of the plant, but held out hope that a buyer could save it and keep auto production in northeastern Ohio. GM is building a $2.2 billion battery plant with partner LG Chem in that region.
(Updates with financial data in the seventh paragraph.)
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