Cash-Strapped Electric Truck Startup Lordstown Motors Hires New CEO
【Summary】Cash-strapped electric vehicle startup Lordstown Motors, which is targeting commercial customers with its Endurance electric pickup truck, has hired a new CEO after former CEO Steve Burns abruptly resigned in June. The Ohio-based company announced the appointment of Daniel Ninivaggi, who was former CEO of Icahn Enterprises L.P., a company controlled by billionaire investor Carl Icahn.
Cash-strapped electric vehicle startup Lordstown Motors Corp, which is targeting commercial customers with its Endurance electric pickup truck, has hired a new CEO after former CEO Steve Burns abruptly resigned in June. Burns resigned after the company was accused of falsifying pre-orders for the Endurance. Lordstown's Chief Financial Officer Julio Rodriguez also resigned in June.
The Ohio-based company announced the appointment of Daniel Ninivaggi as its new CEO. Ninivaggi was the former CEO of Icahn Enterprises L.P., a company controlled by billionaire investor Carl Icahn.
Ninivaggi said his focus will be on making sure Lordstown Motors successfully rolls out its Endurace pickup truck in the face of intense regulatory scrutiny. Once that is accomplished, Ninivaggi said the company's financing will take care of itself.
"Job No. 1 is to make sure we stay on track from a production standpoint," Ninivaggi told Reuters in a telephone interview. "Without that, you can't raise capital."
In May, Lordstown Motors said that there is "substantial doubt" that it can continue operations without an influx of new capital.
Lordstown is a public company, having launched its IPO in Oct 2020 in a high-profile SPAC merger deal with DiamondPeak Holdings. The announcement of its new CEO sent the company's shares up as much as 41% on Thursday, before they later fell back to a 16% gain.
Shares of Ohio-based Lordstown Motors trade on the NASDAQ under the ticker symbol "RIDE."
Last month, Lordstown said a hedge fund had committed to purchasing up to $400 million of the startup's shares over a three-year period, Reuters reported. Executives said that the firm was exploring other financing options, including debt, according to Reuters.
Also last month, Lordstown admitted it was under investigation by the SEC over its SPAC merger with DiamondPeak Holdings, as well as the number of pre-orders it claims it has for the Endurance. The company was accused of misleading investors by inflating the number of preorders.
When Lordstown first announced its plans to go public through a reverse merger last August, the startup claimed it had pre-orders for the Endurance pickup truck worth about $1.4 billion.
During the unveiling event for the Endurance pickup in June 2020, which was attended by former Vice President Mike Pence, Burns said that it had already sold out the first production run of 14,000 Endurace pickups.
Vice President Pence also spoke at the Endurance unveiling, touting the return of manufacturing to the Ohio region spearheaded by what he said are "innovative companies" like Lordstown Motors.
However Lordstown's house of cards began to tumble after a scathing report in March from Hindenburg Research, a company that also investigated fuel cell truck startup Nikola Corp., which also led to the resignation of its CEO, Trevor Milton.
Hindenburg accused Lordstown of overstating the viability of its technology and misleading investors on the pre-orders. The company eventually admitted it had no binding orders for the Endurance, which caused its stock to fall by nearly 80%.
Lordstown Motors however, rejected Hindenburg's other accusations as false.
About the Endurance Electric Pickup Truck
The battery-powered Endurance pickup is a rugged truck designed for commercial customers. It's engineered to be lightweight, with all-wheel drive powertrain and a low center of gravity. Lordstown said the battery-powered Endurance gets the gasoline equivalent of 75 mpg.
In 2019, Lordstown Motors announced it hired Rich Schmidt, a former director of manufacturing at Tesla, as its chief production officer to oversee the production of the Endurance.
The Endurance electric pickup is also the first production vehicle to utilize a unique 4-wheel-drive hub-motor system, which reduces the number of moving parts.
In May 2020, Lordstown Motors announced that it signed an exclusive licensing deal with Elaphe Propulsion Technologies, a developer of in-wheel electric motors that will be used in the Endurance. Elaphe is a Ljubljana, Slovenia-based developer of high-tech propulsion technology for the auto industry.
Lordstown Motors is also one of the few EV manufacturers with an auto factory. The company announced in November 2019 it acquired General Motors' shuttered 6.2 million square foot Lordstown assembly plant in Ohio.
General Motors announced it was closing its Lordstown, Ohio factory in Nov 2018 as part of a larger company-wide restructuring plan to trim expenses, including a shift from building sedans to more profitable SUVs and pickups.
However, rather than let the plant sit idle, GM agreed to loan Lordstown Motors up to $40 million to retool the plant and get it ready for electric vehicle production, so the company could begin its ambitious plan of building its electric Endurance pickup. GM also took an equity stake in the company with a $75 million investment.
Now with its new CEO, the company is looking to turn things around. However, it won't be an easy task after the fallout of the Hindenburg Research report, the abrupt departure of former CEO Steve Burns, as well as a falling stock price, which scared away investors.
Lordstown Motors is also facing growing competition from rival Rivian, which is about to launch its R1T electric pickup later this fall. Rivian is backed by e-commerce giant Amazon.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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