Lordstown Motors Corp. Electric Truck Endurance sits on stage during the unveiling of events in Lordstown, Ohio, USA, on Thursday, June 25, 2020.
Matthew Hatcher | Bloomberg | Getty Images
Launching electric vehicle Lordstown Motors has announced that it is on track to begin production of its Endurance pickup in the third quarter, about a year later than expected. Yet, even if it reaches that start date, the company expects to lose money on each of the roughly 500 trucks it hopes to deliver by the end of the year.
It is still questionable whether Lordstown will survive long enough to face the challenge. The company’s financial future depends on an agreement it made last September to sell its Ohio plant to Taiwanese contractor Hon Hai Technology Group, better known as Foxconn. Under the terms of the agreement, it must be closed by May 18th. (The original terms required the deal to be completed by May 14, but the parties agreed to a four-day extension, Lordstown said Monday.)
If the deal doesn’t happen – it hasn’t been done since Monday morning – Lordstown will have to repay the $ 250 million advance that Foxconn has made over the past few months.
The return would exhaust almost all the remaining money of the future truck manufacturer. Lordstown had $ 203.6 million in cash on March 31, and received an additional $ 50 million from Foxconn in April. Almost all of this will have to be repaid if the deal doesn’t happen.
If the deal closes, Foxconn will make a final payment of $ 30 million, plus an additional payment of about $ 27 million to recoup some of Lordstown’s costs. But because of that, Lordstown will still be left without the money it needs to increase Endurance production.
Assuming a successful close with Foxconn, Lordstown is likely to have to raise an additional $ 150 million by the end of the year, Chief Financial Officer Adam Kroll said Monday.
The news was part of Lordstown’s earnings report in the first quarter. It recorded a net loss of $ 89.6 million in the first quarter, or 46 cents per share, compared to a loss of $ 125.2 million (72 cents per share) in the first quarter of 2021. Revenue then and now was zero because the company is not yet a transport vehicle.
Lordstown’s operations spent a net $ 69 million in cash in the first quarter, including $ 21.9 million in capital costs for the tool and related costs for its assembly line. Its money-burning rate is likely to accelerate as it approaches the start of Endurance production.
Shares of the company fell more than 11% to about $ 1.70 in trading on Monday morning.
The company’s shares fell nearly 19% in early trading to a new low of $ 1.55 before recovering somewhat. Shares are still down about 5% since Monday at noon.