A new rival doesn't make things easier.
Lordstown Motors has had it rough lately. Not long ago, it was the subject of a troubling report from short-seller firm Hindenburg Research claiming the Ohio EV truck company falsified and misled investors with fake pre-orders amounting to around 100,000 units. Lordstown was then found to have failed to pay $570,000 in real estate taxes due in March. These are not good signs for a publically traded company whose IPO netted around $675 million. And now things are beginning to look even worse.
The automaker released a financial report earlier this week where it announced it has "encountered some challenges, including Covid-related and industry-wide related issues" as it aims to begin series production of its Endurance truck.
It reported a net loss of $125 million and will cut vehicle production by half from around 2,200 units to just 1,000 this year to help save money, though this depends if additional funding can't be found. If so, CEO Steve Burns says the original production plan could be reinstated. Equally troubling is the company's projected expenses, which were originally estimated between $220 million and $235 million. This has now increased to between $335 million and $350 million. The year-end liquidity forecast has been lowered too, from $200 million to between $50 million and $75 million.
In short, Lordstown Motors is losing cash fast. Without an infusion of new funds, things will probably only get worse. CNBC reports shares of Lordstown Motors dropped over 9 percent following the report's release.
The Ford F-150 Lightning, specifically the $40,000 Pro commercial trim, is also causing Lordstown executives to lose sleep. The fact that a major automaker like Ford is now in the EV truck business doesn't bode well for a troubled start-up like Lordstown. The F-150 nameplate has instant name recognition and a nationwide dealer network plus a multi-million dollar marketing budget.
On top of that, Ford is financially healthy as the stock market reacted extremely favorably to the Lightning's release. An all-electric Chevy Silverado isn't too far behind and Ram's parent company Stellantis is eager to join the EV truck battle. Ironically, one of Lordstown's financial supporters is GM, but that won't be anywhere near enough to turn things around. Without further funding, Lordstown could soon find itself in a dire situation.