Lordstown slashes ’21 production plans, says more capital needed

Lordstown Motors Corp Chief Government Steve Burns poses with a prototype of {the electrical} automobile start-up’s Endurance pickup truck, which it’s going to start out developing throughout the second half of 2021, on the corporate’s plant in Lordstown, Ohio, U.S. June 25, 2020.

Lordstown Motors | Reuters

Shares of Lordstown Motors tumbled greater than 9% all through after-hours shopping for and promoting after the corporate slashed its manufacturing steering for the yr and talked about it’d wish to enhance additional capital.

In a press launch Monday, Lordstown CEO Steve Burns talked about the corporate has “encountered some challenges” as a result of it prepares to start out manufacturing of {an electrical} pickup truck known as the Endurance in late-September.

Lordstown talked about it expects to produce — at best — half of the vehicles it beforehand forecasted this yr. It moreover talked about its projected payments shall be between $335 million and $350 million, up from between $220 million and $235 million. It moreover lowered its forecast for year-end liquidity from not lower than $200 million to between $50 million and $75 million in cash and cash equivalents.

Burns cited “considerably greater than anticipated expenditures for elements/tools, expedited transport prices, and bills related to third-party engineering sources” as causes for the rise in payments.

“We secured a lot of vital elements and tools upfront, so we’re nonetheless able to ramp the Endurance, however we do want further capital to execute on our plans,” he talked about. “We imagine we now have a number of alternatives to lift capital in numerous types and have begun these discussions.”

The changes are the latest blow to Lordstown. Shares of the aspiring automaker tumbled remaining week after Wolfe Analysis downgraded the inventory to underperform with a $1 price purpose following the debut of the Ford F-150 electrical pickup, a competitor to the Lordstown Endurance.

In March, Lordstown moreover confirmed the U.S. Securities and Change Fee had requested information regarding claims by fast vendor Hindenburg Analysis that it misled consumers.

Hindenburg accused Lordstown in a March report of using “pretend” orders to spice up capital for the Endurance. The short vendor claimed the pickup was years away from manufacturing, nonetheless Lordstown maintains it’s on monitor to start out out making the automobile in September.

Lordstown went public by the use of a selected operate acquisition firm, or SPAC, in October. It’s amongst a rising group {of electrical} automobile start-ups going public by the use of gives with SPACs, which have turn into a popular technique of elevating cash on Wall Road because of they’ve a extra streamlined regulatory course of than typical preliminary public selections.

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