Lordstown Motors admits that electric truck orders aren’t ‘firm purchase commitments’


It’s past time for Lordstown Motors (RIDE) to get some real executives in its C-suite and on the board earlier than the entire electric truck experiment actually will get short-circuited. 

“To clarify recent remarks by company executives at the Automotive Press Association online media event on June 15, although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments,” Lordstown Motors stated Thursday in a new filing

The submitting comes a day after Lordstown President Rich Schmidt stated at an occasion the corporate had agency orders for the entire Endurance electric vehicles it intends to construct this 12 months and 2022.

“These vehicle purchase agreements generally include a projected buyer order schedule over the three to five year life of the agreement, and may be terminated by either party at will on 30 days’ notice. They do not commit the counter parties to purchase vehicles, but we believe that they provide us with a significant indicator of demand for the Endurance,” Thursday’s submitting defined.

Shares of Lordstown fell nearly 3% on the news. The inventory is down 8.8% on the week. 

In brief, it has been a disastrous week for the upstart electric truck maker — one that solely raises considerations on the Street if the corporate will survive. 

Lordstown Motors stated Monday that CEO and founder Steve Burns and CFO Julio Rodriguez resigned after a particular board committee discovered pre-order disclosures for the Endurance to be inaccurate. Angela Strand — its lead impartial director — assumed the CEO place till a everlasting chief is discovered. Becky Roof — an out of doors rent with in depth finance perform expertise — was named interim CFO.

Strand declared at Wednesday’s occasion it was a “new day” for Lordstown. It positive would not seem that manner.

The govt resignations comply with fast on the heels of Lordstown warning in a SEC submitting on its means to proceed as a going concern. Lordstown can be a couple of weeks faraway from telling traders it wanted money — quick — if it have been to satisfy its new lowered manufacturing targets for its electric truck known as the Endurance.

Even with the spate of downright ugly information, there may very well be a number of extra sneakers to drop on Lordstown traders quickly.

First, it is unclear what Burns does together with his almost 27% stake in Lordstown. Dumping Lordstown inventory might create extra promoting stress available in the market. It would not be too totally different than when now ex-Nikola CEO and founder Trevor Milton offered a big slug of inventory in April, which put stress on the inventory worth. Milton left the corporate after a important Hindenburg Research report late in 2020.

“Anticipate technical selling pressure related to potential stock disposals from departing management, particularly Mr Burns who is the single largest shareholder of RIDE with a 26.25% stake as of the amended 10-K filed June 8, 2021 (46.35M shares),” Morgan Stanley auto analyst Adam Jonas stated in a word to purchasers.

The different concern for traders is that if everlasting administration — as soon as solidified — sticks with the signature hub and motor design of the Endurance truck. If they do not, it might show mighty pricey to overtake.

Explained Jonas, “We continue to believe the biggest issue facing the company is the dependency of the proposition systems in-hub motors. While a change of architecture would add as much as a year or two to the start of production, we believe moving to an alternative motor strategy or an entirely different product and go-to-market strategy altogether may be required to preserve sustainable equity value. It is our understanding that Steve Burns was the primary proponent of the hub motor system.”

And lastly, there stays the skeletons in Lordstown’s closet from Burns that creates a bunch of unknowns as new administration finally digs in. Consider these factoids: two of the corporate’s board members (Strand and John Rucidlo) have ties (each labored there throughout Burns’ tenure) to Workhorse Group, the trucking firm based by Burns.

Meanwhile, your entire Lordstown board oversaw the creation of its present mess.

It’s probably a lot of the board will have to be overhauled together with the Burns-created administration group. At this level given the present debacle at Lordstown, traders would most likely welcome the set up of recent faces for the highest 10 govt spots on the firm and an entire board refresh. 

The various to this: extra weeks corresponding to this for Lordstown. 

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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