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While Lordstown Motors says: significantly more money is needed to remain viable, industry analysts aren’t writing off the electric vehicle business with at least one saying the Northeast Ohio company could turn a profit in the coming years.
Lordstown Motors announced in a regulatory filing on Tuesday that it needs to raise significantly more money to continue operations; the announcement sent stock prices down. The company said the nearly $590 million in cash available is not enough to last next year and meet its goals in building its full-size Endurance pickup.
The company said in a statement Wednesday that it has “sufficient capital to continue operations, meet supplier commitments and begin limited production.”
The company indicated in its recent filings that it may need to raise additional capital to support its ongoing production plan, a spokesman said.
The update provided in an earlier earnings call and in Tuesday’s SEC filing indicates increased research and development spending due to COVID-related supply chain issues and the decision to source production of some parts , means the company has confirmed it needs additional funding to ramp up to commercial production, spokesman Ryan Hallett said.
“We are debt free, have significant physical assets and multiple viable ways to raise capital, including asset backed financing, equity, equity or debt financing, loans, including our pending application for a [federalAdvanced Technologies Vehicle Manufacturing loan], as well as potential longer-term strategic investments,” he said. “We are already in active talks with multiple parties to do this.”
Share prices fluctuated widely on Wednesday, ranging from a low of $8.88 to a high of $12.87 in trading during the day. (Stocks fell more than 16% on Tuesday.) Shares closed a penny to $11.23. The stock has ranged from a low of $6.69 to a high of $31.80 in the past 52 weeks. At $11.23 per share, Lordstown Motors has a market value of nearly $2 billion based on the number of shares outstanding.
The company reported that it lost $125.2 million for the quarter ended March 31. It also said it had built 48 of the 57 Endurance prototypes by May 24 and would begin pre-production vehicles in July.
The race to bring the first all-electric pickup to the US market is at stake
Industry analysts said there was little to nothing new in this week’s announcement in a Securities and Exchange Commission filing that the company needs a capital injection. An analyst said Lordstown Motors should still be the first US company to bring an all-electric pickup to the market.
Analysts noted that earlier this year, Lordstown Motors executives had said essentially the same thing about needing more capital as they continued to build early versions of the Endurance and continued to rebuild the massive former General Motors complex in Trumbull County. for the production of electric vehicles and batteries. The truck has an electric motor in each of the four wheels.
“We don’t think this comes as a surprise next [Lordstown Motor’s first quarter] earnings release and conference call, after which the company readily disclosed that it needed additional capital to execute on its business plan and that discussions for incremental financing … had already begun,” Bank of America analyst John Murphy wrote in a statement. note to customers this week.
“Nevertheless, with significant asset value (i.e. former GM Lordstown plant), management focus on securing capital and still widely available capital for AutoTech entrants, we hesitate to conclude that RIDE (Lordstown Motor’s stock symbol) will not be able to to arrange additional funding,” Murphy wrote.
Murphy has a neutral assessment of the stock, saying the Endurance pickup and the company’s business plan to target sales to fleet operators face significant challenges.
Different options for cash infusion
Joseph Spak, an industry analyst at RBC Capital Markets, meanwhile, said he valued Lordstown Motors stock at a short-term price of $5 a share, but expected the company to get the funding it needs. The company has a significant asset in the Lordstown plant and could, if necessary, lease space to other automakers and develop and sell battery and vehicle technology to other companies, he said.
The company will need a total of $2.25 billion in additional capital from this year through 2025 to remain solvent, Spak said in a note to clients. The money will likely come from issuing additional shares, but it could also include government bonds and other sources, he said in the note.
The analyst also said the company could be profitable in the coming years if its vehicle technology proves itself and sales meet targets. The company could break even in 2026 and turn a profit in 2027, based on modeling, Spak wrote. Lordstown Motors has said it plans to use the Endurance platform for a van and large SUV in the coming years.
But the company’s key challenges include unproven electric motor-in-a-wheel hub technology and its business plan to target fleet sales, Spak wrote.
‘Voltage Valley’ ambitions depend on the success of a startup
The startup company has been billed as an innovative savior, turning that portion of Northeastern Ohio from the Mahoning Valley into the “Voltage Valley.”
US Rep. Tim Ryan, whose precinct includes the Lordstown factory, spoke about the company’s disclosures in a statement on Wednesday.
No doubt the news coming out of Lordstown Motors is concerning, and while I will continue to use my position to assist them wherever possible, it is important to remember that they are part of a larger movement that is transforming our region into what has been conceived as Voltage Valley,” Ryan said. “Among the great work being done at BRITE Energy Innovators; Ultium Cells LLC’s electric battery plant in Lordstown, which will be operational early next year and expected to create 1,100 new high-tech jobs; and the numerous electric vehicle supply chain companies that the Youngstown/Warren Regional Chamber currently assists, our community is still leading the jobs of the future.
Lordstown Motors remains “fully committed” to building the Endurance, said its spokesman, Hallett.
“We are incredibly excited to be welcoming many of our customers, partners, investors and others to Lordstown Week in two weeks’ time to see first-hand the progress we’ve made,” said Hallettsaid. Lordstown Week is scheduled for June 21-25 for corporate investors, analysts, customers and partners and will include factory tours, presentations and test drives of the Endurance.
The massive former General Motors factory was a national campaign stop last year with a visit from former Vice President Mike Pence, who was allowed to drive into the factory in June 2020 in the only working Endurance truck at the time. The factory has been a stop for other politicians over the years, including former President Barack Obama speaking at the factory when he ran for reelection.
Newcomer takes on auto industry heavyweights
Lordstown Motors also faces stiff competition from other electric vehicle manufacturers and legacy companies, including Ford and General Motors, which is a shareholder of Lordstown Motors. (Among other investors in Lordstown Motors is Workhorse Group, a Cincinnati technology company that develops and builds electric vans/vans. Steven Burns founded Workhorse and left the company as chief executive in 2019 to lead Lordstown Motors.)
Ford has announced it will build an all-electric version of America’s best-selling vehicle, the F-150 pickup truck, called the Lightning, beginning in 2022. Production figures recently showed that Ford has made more all-electric Mustang Mach-E vehicles than gas-powered Mustangs so far this year.
General Motorsis is bringing back the Hummer truck brand as an electric vehicle and will also have other battery-powered vehicles in its lineup, including a Chevrolet Silverado electric pickup.
And California-based Tesla, which has largely launched the current EV wave in the nation, is also developing its Cybertruck battery-powered pickup.
Jim Mackinnon is in business. He can be reached at 330-996-3544 or [email protected]. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ.
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