Lordstown Motors Corp’s Endurance electric pickup sits on stage during a launch event in Lordstown, Ohio, US, on Thursday, June 25, 2020.
Matthew Hatcher | Bloomberg | beautiful pictures
Difficult to start electric car Lordstown Motors says it is on track to begin production of its Endurance pickup truck in the third quarter, about a year later than originally planned. Even if it does reach that start date, however, the company expects a loss for each of the roughly 500 trucks it hopes to ship by the end of the year.
Whether Lordstown will last long enough to face that challenge remains a question. The company’s financial future depends on an agreement it signed last September to sell its Ohio factory for Taiwan contract manufacturer Hon Hai Technology Group, better known as Foxconn. Under the terms of the agreement, it must end by May 18. (Terms initially required the agreement to end by May 14, but the parties agreed to a four-day extension, Lordstown. said on Monday.)
If the deal doesn’t happen – as of Monday morning, it has not yet – Lordstown will be required to repay $250 million in advance payments Foxconn has made over the past few months.
The refund will drain 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. Nearly all of that money would have to be repaid if the deal didn’t happen.
If the deal closes, 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 still leaves Lordstown short of the cash needed to ramp up production of Endurance.
Assuming a successful end to Foxconn, Lordstown will likely have to raise another $150 million or so by year’s end, Chief Financial Officer Adam Kroll said Monday.
Lordstown reported a net loss of $89.6 million for the first quarter, or $0.46 per share, compared with a loss of $125.2 million ($0.72 per share) in first quarter of 2021. Sales then and now are nil, because the company hasn’t shipped the car yet.
Lordstown’s operations used up $69 million in cash in the first quarter, including $21.9 million in capital expenditures on tooling and related costs for its assembly line. Its cash burn rate is likely to accelerate as it gets closer to the Endurance production start date.
Shares of the company fell more than 11% to about $1.70 in Monday morning trading.
