Workers install door hinges on the body of an Endurance electric pickup prototype on June 21, 2021 at the Lordstown Motors Assembly Plant in Ohio.
Michael Wayland | CNBC
Beleaguered electric truck startup Lordstown Motors on Thursday reaffirmed plans to begin commercial production of its first vehicle this quarter and launch the first customer deliveries by the end of the year.
Lordstown CEO Edward Hightower said production of the Endurance pickup will be slow and heavily dependent on the availability of capital. He said the company only expects to produce around 500 vehicles through early 2023, an extremely slow production ramp-up by industry standards.
Chief Financial Officer Adam Kroll said the company will need to raise “substantially more capital” to produce the initial 500 Endurance electric trucks, though the company projects it will need less money than previously thought.
Lordstown shares rose as much as 27% during Thursday morning trading to $3.73 a share. The stock is down 15% this year and 58% from its 52-week high of $8.93 a share. The company’s market capitalization is approximately $740 million.
The company said it will need to raise between $50 million and $75 million this year, down from previous expectations of $150 million. Lordstown will need additional capital in 2023, Kroll said.
Lordstown, along with its second-quarter results, said its cash balance of $236 million at the end of the first half of the year exceeded internal expectations and extends the runway of the cash-strapped company, but is not enough to fund the production.
The company reported its first quarterly operating profit of $61.3 million for the period ended June 30, despite not having delivered any vehicles, on gains related to the sale of its Ohio factory to contract manufacturer Foxconn. The gain included a $101.7 million gain on the sale, as well as a $18.4 million reimbursement of Foxconn’s operating expenses.
Lordstown and Foxconn announced in November plans for the Taiwan-based company to buy the facility and a deal for the company to build the struggling startup’s Endurance pickup. The deal was announced as Lordstown was in need of cash, delaying production of its van, and was mired in controversy following the resignation of its CEO and founder, Steve Burns, earlier in the year.
Lordstown, which went public in October 2020, was among a group of electric vehicle startups that went public through special purpose acquisition companies, or SPACs, since the beginning of the decade. The deals were initially hailed by Wall Street and investors, but controversies, product delays, lack of financing and executive reshuffles have sent shares of most companies plummeting.
Lordstown was initially expected to be one of the first companies, if not the first, to launch an electric pickup truck, with initial estimates as early as 2020. However, General Motors, Rivian Automotive and Ford Motor have all jumped ahead of the company in the market following problems and delays with the Endurance.
Ford’s electric F-150 is perfectly positioned to compete against the Endurance in the commercial truck market. Ford’s F-150 electric pickup starts around $23,000 less than the Endurance, plus it has first-mover advantages and the backing of a well-funded company.