Lordstown Motors chief executive, chief financial officer resign amid allegations of misleading investors
Electric vehicle company Lordstown Motors has weathered the departure of its chief executive officer Steve Burns, and its chief financial officer Julio Rodriguez, after a report from a board committee found inaccuracies in parts of the company’s disclosures on vehicle pre-orders, The Wall Street Journal reported.
A board committee within Lordstown Motors was formed to investigate allegations made by investment research firm Hindenburg Research that claimed the electric vehicle start-up had misled investors about the strength of its pre-order reservations, as well as regarding progress towards the start of production.
“It’s the latest in a pretty problematic list of developments,” said Jon Lopez of investment bank Vertical Group, adding that Lordstown Motors isn’t expected to be able to establish itself in an increasingly competitive EV market. “The probablility of that [happening] was low to begin with, and has decreased,” Lopez said.
Hindenburg Research also asserted in its report that Lordstown Motors’ September launch date for the Endurance EV truck was unrealistic, however this claim was rejected by the Lordstown Motors. The Wall Street Journal reported that the EV start-up has also wound back its production target, now expecting to build half of its previously planned 2,200 truck output for this year.
Lordstown Motors attributed the downscaling to higher-than-expected costs from pandemic-related expenses, supply chain issues and external engineering support.
The company also said that it would be unable to reach full production volume without raising more capital, saying late last month that it expects to end the year with US$50 million to US$75 million (RM206 million to RM309 million), down from the US$200 million (RM823 million) forecast in March.
The disclosures from Lordstown Motors largely verifies the concerns raised in his earlier report, said Hindenburg Research founder Nathan Anderson. “The top two executives don’t resign when allegations are [without merit],” he said.
Lordstown Motors gets its name from Lordstown in Ohio, where a Chevrolet facility was located for the production of the Cruze. Job losses at the plant resulting from the discontinuation of the Cruze became a political issue involving then-US president Donald Trump, and the site was sold by General Motors to Lordstown Motors. This was where the GM-LG Chem joint venture would establish a battery plant for GM’s future EVs.
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