U.S. electrical truck maker Lordstown Motors mentioned on Tuesday there was “substantial doubt” about its means to proceed as a going concern within the subsequent 12 months due to issues funding the manufacturing of its automobile, inflicting its shares to plummet.
Lordstown, which went public final 12 months by way of a reverse merger with a special-purpose acquisition firm (SPAC), has struggled with the launch of its Endurance pickup truck. The truck is being constructed at a former Common Motors Co plant in northeast Ohio.
A number of electrical automobile makers over the previous 12 months have gone public through mergers with SPACs, bypassing the rigorous scrutiny of a conventional preliminary public providing course of.
“The corporate believes that its present degree of money and money equivalents usually are not enough to fund business scale manufacturing and the launch of sale of such autos,” Lordstown said in a Tuesday quarterly filing with the U.S. Securities and Trade Fee.
“These situations elevate substantial doubt relating to our means to proceed as a going concern for a interval of at the very least one 12 months,” the corporate added.
Lordstown’s shares fell 16.3% in common buying and selling and have been down 5.7% in after-hours buying and selling.
A Lordstown spokesman declined additional remark, pointing to statements made by the corporate throughout its earnings name final month.
Lordstown mentioned on the decision that its Endurance manufacturing this 12 months can be half its prior expectations and it wanted further capital to execute its plans. It blamed COVID-19 and industry-wide associated points for larger spending on components, transport and third-party engineering assets.
In March, Lordstown’s shares slumped after Hindenburg Analysis disclosed it had taken a brief place on the inventory, saying the corporate had misled shoppers and traders.
Brief sellers guess the value of a inventory will fall by borrowing and promoting shares within the hope of shopping for them again at a less expensive value and pocketing the distinction.
Lordstown subsequently mentioned the SEC had requested for data associated to its merger with SPAC DiamondPeak Holdings and preorders of its autos. Chief Govt Steve Burns mentioned Lordstown was cooperating with the company’s investigation.
GM, which is a minority shareholder in Lordstown, declined to touch upon Lordstown’s Tuesday submitting.
Through the Might 24 earnings name, Lordstown mentioned choices to boost cash may embrace asset-backed financing and investments from strategic companions like different automakers. Nevertheless, Burns, the corporate’s largest shareholder, mentioned Lordstown was not on the market.
Burns mentioned on the decision that the launch of the Endurance, which is focused at business clients, remained on monitor for September. On Tuesday, nevertheless, Lordstown mentioned it had executed “restricted advertising and marketing actions” across the truck and had no binding buy orders or commitments from clients.
Lordstown reported a first-quarter lack of $125 million, and mentioned it had money and money equivalents of about $587 million.
At a June 2020 unveiling of the Endurance at its Ohio plant, then U.S. Vice President Mike Pence credited President Donald Trump with combating for American jobs within the Mahoning Valley area the place the plant is predicated.
“In the present day is a brand new starting for Lordstown and it is a new day of management in electrical autos in the US,” Pence mentioned on the time. “In the present day is another instance of President Trump’s dedication to make American manufacturing nice once more.”
The plant’s destiny turned a political lightning rod after GM introduced its deliberate closure in November 2018, drawing condemnation from Trump and lots of U.S. lawmakers. Lordstown purchased it and tools for $20 million.
(Reporting by Ankit Ajmera in Bengaluru and Ben Klayman in Detroit, further reporting by David Shepardson in Washington; Enhancing by Anil D’Silva and Rosalba O’Brien)