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Embattled electric truck maker Lordstown Motors has revealed that there’s “substantial doubt” about its ability to stay in business through the end of the year.
Lordstown, which is backed by General Motors, revealed a going-concern notice Tuesday in a regulatory filing that amended its annual report.
Going-concern notices can warn investors of threats to their survival unless additional funding or other solutions to the uncertainty are found.
The two-year-old company has been struggling to convert a former GM plant in Ohio to produce its electric pickup trucks. It has previously said its first model, called the Endurance, will start production in September.
“The company believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles,” Lordstown said in the filing with the Securities and Exchange Commission.
“These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year,” the company added.
The company went public last year through a deal with a special-purpose acquisition company, or SPAC, that valued it at $1.6 billion. It was one of several electric carmakers to go public through a SPAC deal during the pandemic.
Shares of the company plummeted more than 16 percent on Tuesday’s disclosure.
As of the end of March, Lordstown reported a quarterly loss of $125 million, and said it had about $587 million of cash and cash equivalents.
Lordstown executives said on a call with analysts in late May that its production this year would be half its prior estimates. CEO Steve Burns said it needed additional capital to complete its plans.
The company largely blamed COVID-19 and rising production costs across the industry.
Shares of the company plummeted in March after Hindenburg Research, a short-selling firm that rose to prominence last September after publishing a damning report on Nikola, accused Lordstown of constructing a “mirage” around its truck production.
Shares of Lordstown tanked further less than a week later after it told investors it’s also facing scrutiny from the feds.
The company has also drawn political attention since its inception. The Trump administration hailed Lordstown’s efforts to revitalize a small Ohio manufacturing town.
GM was set to shut down Lordstown’s manufacturing plant, drawing condemnations from former President Donald Trump. The Detroit automaker then sold the plant and its equipment to Lordstown for $20 million in 2019.
At a June 2020 unveiling of the company’s truck at its Ohio plant, then Vice President Mike Pence credited President Donald Trump with fighting for American jobs.
“Today is a new beginning for Lordstown and it’s a new day of leadership in electric vehicles in the United States,” Pence said at the time. “Today is one more example of President Trump’s commitment to make American manufacturing great again.”
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