Lordstown Motors: We Require Additional Capital To Continue

Which creates substantial doubt about its future.

Lordstown Endurance

Mark Kane

By: Mark Kane

Jun 10, 2021 at 8:28am ET

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Lordstown Motors, after showing a net loss of $125 million in Q1 2021 and reporting that the initial production of the Lordstown Endurance pickup will be limited by at least 50%, now says that it needs a cash injection... or there will be a problem.

Here is the key part in the latest Form 10-K filling:

"We require additional capital to implement our business plan, and it may not be available on acceptable terms, if at all, creating substantial doubt as to our ability to continue as a going concern."

According to Lordstown Motors' Q1 report, 48 out of 57 beta vehicles were built and the beta program is expected to conclude by the end of June or so. The Lordstown Endurance also passed two of the most difficult crash tests – frontal and pole.

The initial production is expected to start in late September 2021, but at a limited (undisclosed) capacity.

"Expected Endurance production in 2021 will be limited and would at best be 50% of our prior expectations."

Lordstown Motors explains that it has encountered various challenges that affect the launch of the Endurance:

"These include significantly higher than expected expenditures for parts/equipment, expedited shipping costs, and expenses associated with third-party engineering resources. We secured a number of critical parts and equipment in advance, so we are still in a position to ramp the Endurance, but we do need additional capital to execute on our plans. We believe we have several opportunities to raise capital in various forms and have begun those discussions."

The biggest problem is the insufficient cash position to introduce a new all-electric pickup. As we understand, at the current rate, the company will be left with just $50-75 million in cash and cash equivalents as of the end of this year:

"We are updating the financial outlook for 2021 that we previously provided with our fourth quarter 2020 earnings release. Revised guidance is as follows:

Expected Endurance production in 2021 will be limited and would at best be 50% of our prior expectations.

Expected capital expenditures of between $250 and $275 million.

Expected operating expenses of between $55 and $60 million in selling and administrative (S&A) costs and between $280 and $290 million in research and development (R&D) costs.

Expected year-end 2021 liquidity of between $50 and 75 million in cash and cash equivalents after giving effect to certain cost reductions and delayed investments."

Some estimate that the company will need a few billion in total. We should learn more at the upcoming Lordstown Week during the week of June 21.

Lordstown Motors hopes to get some external help in form of Advanced Technology Vehicle Manufacturing (ATVM) loan, as well as "tax credits and grants across multiple jurisdictions".

Other non-directly related problems on the horizon are of course competitors, including the newly launched Ford F-150 Lightning, which especially in the Pro version might become a killer to the Lordstown Endurance dream.

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