Lordstown Motors Corp. is beginning to ship battery-powered electric pickup trucks to customers, an accomplishment that quiets doubts about the SPAC-backed startup’s viability even as it sells the trucks for less than they cost to build.
The company said Tuesday it received the final approvals from the U.S. Environmental Protection Agency and the California Air Resources Board, allowing it to sell the trucks in all 50 states. With safety approvals already in hand, assembly of the trucks by contract manufacturer Foxconn began in September.
Lordstown Motors sold the former General Motors plant it received from practically nothing to Taiwan’s Foxconn for $230 million. It agreed to make Foxconn the contract manufacturer for the Endurance.
Foxconn moves in to Lordstown Motors
More recently, Foxconn agreed to put more cash in Lordstown in exchange for up to 19.99% of its stock and two board seats. That is pending approval by the Committee on Foreign Investment in the United States.
Foxconn plans to build multiple electric vehicles for numerous companies in the 6.2 million-square-foot assembly complex that GM operated for 53 years.
“I am very proud of the Lordstown Motors and Foxconn EV Ohio team for their hard work, grit, and tenacity in achieving this milestone,” Lordstown CEO Edward Hightower said in a news release. “We are very excited to start delivering vehicles to our commercial fleet customers.”
Slow ramp-up for Lordstown Motors
It will be a slow ramp-up. Lordstown said in its third-quarter earnings call that it expects to deliver 30 of an initial batch of 500 Eururance pickups this quarter. The remainder would be shipped in the first half of 2023. The company declined to name its customers.
“We will continue to build at a slow rate as we address remaining part pedigree and part availability issues. We expect to increase the speed of production into November and December,” Hightower said in late September.
The bill of materials used in the Endurance costs significantly more than its $65,060 base price. The Endurance operates under the power of four wheel hub motors, an electrification approach that differs from most competitors.
Endurance a NACTOY finalist
At best, the Endurance appears to be a niche competitor. Yet it is a finalist for the North American Truck of the Year award that will be announced in January.
The Endurance faces off against legacy automakers like Ford Motor Co., which temporarily capped reservations for the F-150 Lightning electric pickup at 200,000 in December 2021, and startup Rivian, which says it is on track to deliver 25,000 pickups, SUVs and delivery vans for Amazon this year.
“While Lordstown Motors has managed to pass all of the regulatory requirements to sell the Endurance pickup, it still remains to be seen if it can actually get any significant volume of paying customers,” said Sam Abuelsamid, pricipal analyst at Guidehouse Research.
“The Endurance has lower maximum payload and towing capability to the Ford F-150 Lightning Pro at a significantly higher price. Lordstown lacks an established support network and has unproven durability and reliability that is crucial for commercial customers making this a very tough sell except to customers that desperately want an electric truck and can’t get a Lightning or wait for the upcoming [Chevrolet] Silverado EV,” he told FreightWaves.
Speedy cash burn
Lordstown has experienced numerous other setbacks since its founding by former CEO Steve Burns and subsequent acquisition of the plant GM idled in March 2019. Months of fundraising attempts failed until Burns agreed to a merger with special purpose acquisition company DiamondPeak Acquisition Corp.
The merger resulted in Lordstown receiving $780 million before expenses in a lightning-fast 11-week business combination that closed in October 2020. But the money didn’t last long and Burns and his chief financial officer resigned under pressure in June 2021 after the company filed a “notice of going concern” with the Securities and Exchange Commission.
Such filings suggest that a company has a finite period to raise money or go out of business. Lordstown said it could run out of money within a year.
But Burns’ replacement as CEO, Daniel Ninivaggi, struck a deal with Foxconn, first to borrow money and later to sell the plant to the maker of Apple iPhones.
Lordstown shares (NASDAQ: RIDE) traded Tuesday at $1.42, up 7.95%.
Editor’s note: Updates with stock price and comment from Guidehouse analyst
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