Struggling electric vehicle start-up Lordstown Motors said it’s on track to begin production of its Endurance pickup in the third quarter, about a year later than originally expected. Yet even if it hits that start date, the company expects to lose money on every one of the roughly 500 trucks it hopes to ship by year-end.
Whether Lordstown will survive long enough to face that challenge is still in question. The company’s financial future hangs on a deal it struck last September to sell its Ohio factory to Taiwanese contract manufacturer Hon Hai Technology Group, better known as Foxconn. Under the deal’s terms, it must close by May 18. (The original terms required the deal to close by May 14, but the parties agreed to a four-day extension, Lordstown said Monday.)
If the deal doesn’t happen – as of Monday morning, it wasn’t done – Lordstown will be required to refund the $250 million in down payments made by Foxconn over the last several months.
A refund would deplete nearly all of the aspiring truck maker’s remaining cash. Lordstown had $203.6 million in cash as of March 31 and received an additional $50 million from Foxconn in April. Nearly all of that will have to be repaid if the deal doesn’t happen.
If the deal does close, Foxconn will make a final payment of $30 million, plus an additional payment of about $27 million to reimburse some of Lordstown’s costs. But that will still leave Lordstown short of the cash it needs to ramp up production of the Endurance.
Assuming a successful closing with Foxconn, Lordstown will likely have to raise an additional $150 million or so by year-end, Chief Financial Officer Adam Kroll said Monday.
The news was part of Lordstown’s first-quarter earnings update. It reported a net loss of $89.6 million for the first quarter, or 46 cents per share, versus its $125.2 million loss (72 cents per share) in the first quarter of 2021. Revenue then and now was zero, as the company isn’t yet shipping vehicles.
Lordstown’s operations used up net $69 million in cash in the first quarter, including $21.9 million in capital expenses on tooling and related costs for its assembly line. Its rate of cash burn is likely to accelerate as it gets closer to the start of production of the Endurance.
The company’s shares fell more than 11% to about $1.70 in Monday morning trading.
The company’s shares fell nearly 19% in early trading to a new all-time low of $1.55 before recovering somewhat. The stock was still down about 5% as of noon ET on Monday.