Electric vehicle startup Lordstown Motors Corp is “evaluating strategic partners” as part of its search for funding needed to stay in operation, the company’s executive chair, Angela Strand, said on Monday.
Lordstown Motors earlier this month warned it may not be able to continue as a “going concern” if it cannot raise more money to retool its factory in Lordstown, Ohio, for high-volume production.
The company’s shares were down 5% in late afternoon on Monday and were down 49% for the year to date.
Strand is leading the company while the board searches for a replacement for former Chief Executive Officer Steve Burns, who left the company earlier this month. She provided no details on the evaluation of strategic partners.
Since the “going concern” warning, the company has tried to allay worries by saying it was in talks with multiple parties to raise funds. Strand said Monday the company is also “continuing our due diligence” in pursuit of a loan from the U.S. Department of Energy. Burns said in 2020 the company was seeking a $200 million loan from the Energy Department’s Advanced Technology Vehicles Manufacturing loan program.
Before his exit, Burns said on a conference call that Lordstown needed more capital and that production of the Endurance truck this year would be half of the 2,200 vehicles previously expected.
Lordstown Motors executives opened the assembly plant, a former General Motors Co car factory, to investors and reporters on Monday.
Lordstown, which went public last year through a reverse merger with a special-purpose acquisition company (SPAC), has struggled with the launch of its Endurance pickup truck and with questions about governance.
Several EV startups over the past year have gone public via mergers with SPACs, bypassing the rigorous scrutiny of a traditional initial public offering process.
In March, Lordstown’s shares slumped after investment research firm Hindenburg Research disclosed it had taken a short position on the stock, saying the company had misled consumers and investors about its preorders for the Endurance truck that Lordstown initially said were worth $1.4 billion.
The Ohio company subsequently said the orders were not binding and on June 8, when it warned it was running out of cash, disclosed in a regulatory filing it had no binding orders or commitments from customers.
A week ago, just days after Lordstown said it may not have enough money to stay in business over the next year, CEO Burns – who was also the company’s founder and largest shareholder – resigned, as did the chief financial officer. Lordstown also acknowledged it had overstated the quality of preorders.
The following day, Lordstown President Rich Schmidt said the automaker had binding orders, but the company subsequently backtracked from that comment.
The U.S. Securities and Exchange Commission has asked the company for information related to the truck preorders.
The Wall Street Journal reported Monday that senior Lordstown Motors executives had sold shares valued at $8 million in February before the company reported worse-than-expected results.
Filings with the SEC showed the transactions, including the sale by Schmidt of shares worth $5.4 million on Feb 2 and 3
A special committee of Lordstown’s board said in a report June 14 that share sales by certain directors and executives “were made for reasons unrelated to the performance of the company or viability of the Endurance.”