Lordstown Motors Corp. The Endurance electric pickup truck sits on stage during an unveiling event in Lordstown, Ohio, USA on Thursday, June 25, 2020.
Matthew Hatcher | Bloomberg | Getty Images
Starting the electric vehicle in trouble Lordstown Motors said it is on track to begin production of its Endurance pickup in the third quarter, about a year after expected. However, even if it reaches that start date, the company expects to lose money on each of the roughly 500 trucks it hopes to ship by the end of the year.
Whether Lordstown will survive long enough to meet that challenge is still up for debate. The company’s financial future depends on an agreement reached last September sell his factory in Ohio to the Taiwanese contract manufacturer Hon Hai technology group, better known as Foxconn. Under the terms of the agreement, it must be concluded by 18 May. (The original terms called for the deal to be closed by May 14, but the parties agreed on a four-day extension, Lordstown said Monday.)
If the deal doesn’t come true – as of Monday morning, it hasn’t been done – Lordstown will have to repay the $ 250 million down payments made by Foxconn in recent months.
A refund would use up almost all of the aspiring truck manufacturer’s remaining cash. Lordstown had $ 203.6 million in cash as of March 31 and received another $ 50 million from Foxconn in April. Almost all of this will have to be repaid if the deal does not come true.
If the deal ends, Foxconn will make a final payment of $ 30 million, plus an additional payment of approximately $ 27 million to reimburse some of Lordstown’s costs. But that will still leave Lordstown short of the cash needed to ramp up Endurance production.
Assuming a successful close with Foxconn, Lordstown will likely have to raise another $ 150 million or so by the end of the year, Chief Financial Officer Adam Kroll said Monday.
Lordstown posted a net loss of $ 89.6 million in the first quarter, or $ 0.46 per share, versus its loss of $ 125.2 million ($ 0.72 per share) in the first quarter 2021. Revenue then and now was zero, as the company doesn’t ship vehicles yet.
The Lordstown operations consumed $ 69 million in net cash in the first quarter, including $ 21.9 million in capital expenditures for equipment and related costs for its assembly line. Its money consumption rate is likely to accelerate as it approaches the start of resistance production.
The company’s stock was down more than 11% to around $ 1.70 in Monday morning trading.