Electric Business Could Face Failure, says Lordstown Motors

Startup of an electric car Lordstown Motors announced Tuesday that it lacks the financial resources to begin commercial production, putting the company at risk of failure and sending its shares plunging. The company modified its annual report with the Securities and Exchange Commission on Tuesday to state that it may no longer be a going concern in one year.

With $587 million in cash and cash equivalents at the end of the first quarter, the firm said it didn’t have enough money to launch the Endurance, an electric pick-up truck aimed at commercial drivers. The company said, “These conditions raise substantial doubt regarding our ability to continue as a going concern.”

Lordstown stated that it was working to secure additional funds but could not guarantee success. Its stock fell 16% to $11.22 in after-hours trade and continued to decline. The company has been reeling since a short seller accused it of inflating orders early this year, something the business denies.Lordstown Motors first gained headlines in 2019 when it announced that it would take over a former General Motors plant and employ 400 people to make electric vehicles. After GM closed a plant in Ohio, a politically significant state in the Midwest, President Donald Trump chastised the automaker. Lordstown Motors was purchased with a $40 million loan from General Motors, which also invested $75 million.

Workhorse Group, led by Steve Burns, who is currently Lordstown’s chief executive, was the original bidder for the facility. Workhorse’s auditor voiced concerns in 2018 regarding the company’s ability to continue operating as a going concern. Another electric vehicle startup, Workhorse Group, licenses technology to Lordstown and owns 10% of the company.