For drivers on I-80 in Northeast Ohio, the giant manufacturing complex in Lordstown is a landmark, the place where General Motors spent decades making cars like the Chevrolet Cavalier.
GM stopped producing vehicles there in 2019, the latest of many blows to an industrial region anchored by Youngstown and Warren, Ohio. The pain of losing the plant might have been much worse, if not for a promising new business that stepped up to occupy the plant: Lordstown Motors, a start-up that was developing an all-electric pickup. The new company leaned into the idea that a region known for making steel and cars could be reborn as a hub of the clean energy economy.
President Donald Trump was one of many elected officials who praised Lordstown Motors as part of a bright future for Northeast Ohio. “Beyond the plant, it’s incredible what’s happened in the area,” Trump said at a 2020 event at the White House with Lordstown Motors executives and a prototype of the new truck. “It’s booming now. It’s absolutely booming.”
But now there is mounting evidence that the company’s executives exaggerated some of the claims that fueled such optimism.
If the company—which is running low on money and has yet to release its first vehicle—is unable to recover, it would be distressing in part because it’s happening at a plant and in a region that has already faced so much adversity.
On Monday, Lordstown Motors said its founder and CEO, Steve Burns, and chief financial officer, Julio Rodriguez, had resigned. Angela Strand, the lead independent member of the board of directors, is serving as executive chairwoman, while the company searches for a new CEO.
The leadership change followed a regulatory filing a few days earlier, in which the company said it didn’t have enough funding to complete a full ramp-up of production.
“We require additional capital to implement our business plan, and it may not be available on acceptable terms, if at all, creating substantial doubt as to our ability to continue as a going concern,” the filing said.
Back when there was more optimism about Lordstown Motors, one of the reasons was that the company was going to manufacture one of the first of a new wave of electric trucks to hit the market. The company also boasted of having more than 100,000 pre-orders and it had a strategy of focusing on sales to corporate fleets, which seemed like a winning proposition to many investors.
But the company also has faced critics who questioned the timetable and said those pre-orders would not translate to real sales. In March, Hindenburg Research issued a report that said that Lordstown was nowhere near meeting its targets for releasing the truck, and accused the company of deceiving investors about many aspects of its financial state and operations, including grossly exaggerating how serious the pre-orders really were.
“We have found that Lordstown’s CEO, Steve Burns, has led the company through dubious ethical territory, hyping unvetted technology and unrealistic production timelines,” the report said.
Hindenburg is a short seller, a firm that identifies companies it believes are overvalued in the market, and then places the equivalent of a bet that the companies are going to lose value.
Lordstown Motors’ board of directors ordered an investigation of the report’s allegations and released a statement about the results on Monday, moments before announcing the departures of the executives. The company said the Hindenburg report “is, in significant respects, false and misleading,” but also conceded that the report was accurate in some of what it said about pre-orders.
Now, Lordstown Motors is moving forward without Burns, who was the face of the business. The company’s interim leaders need to restore confidence, which they sought to do on Tuesday at an online presentation hosted by the Automotive Press Association.
“It’s a new day at Lordstown,” said Strand, the chairwoman, at the event. Company officials said they are on track to begin production in the fall and have enough money to operate until May 2022.
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The comments helped the company’s stock price recover some of the ground it had lost, but as I’m writing this on Wednesday, Lordstown Motors is trading for about $10 per share, down from a high of more than $30 in February.
A Lordstown Motors spokesman said the company has nothing to add to the public comments it already has made.
I asked Michelle Krebs, executive auto analyst for AutoTrader.com, where things stand for Lordstown Motors.
“When it comes to making motor vehicles, I think what a lot of start-ups have discovered is that it’s incredibly complicated and difficult, and it is ungodly expensive,” Krebs said. “Just ask Tesla.” Her parent company, Cox Automotive, is an investor in Rivian, another company developing an electric pickup.
Tesla, a global EV leader, is the example hanging over the many start-ups developing their own electric vehicles, she said. Tesla had years of financial losses and concerns about its ability to ramp up production, and it has been dogged by short sellers.
Despite the many challenges, Tesla is now profitable and has a market value greater than any traditional automaker. Investors want to find the next Tesla.
Krebs said Lordstown Motors’ problems are especially concerning because of the implications for a community and region that already went through the pain of losing the GM plant.
Lordstown Motors arrived on the scene in 2019, providing good news for state and federal officials who were upset that GM was shuttering the plant.
The plant had employed more than 10,000 workers during its heyday, but also had endured layoffs and labor strife, and was down to about 1,600 workers by the time it closed. Lordstown Motors employed about 250 people as of last November, and said it planned to have about 1,500 by the end of 2021.
Now, people like Lordstown Mayor Arno Hill are left to prepare for the worst.
“I don’t know what to think right now,” Hill said, interviewed this week by WKBN television of Youngstown.
One of the problems for the company is that any delays are taking away from its chances of being one of the first to offer an electric truck for sale. The company said last year that its truck would be available by late summer, 2021. Now Lordstown is saying production will begin in the fourth quarter, and I doubt that anybody would be surprised to see that pushed back.
Instead of having a big lead, the release of the truck is now getting uncomfortably close to the debut of an eagerly awaited product, the all-electric Ford F-150 Lightning, which Ford says will be available in spring of 2022.
Ford says it expects that corporate fleets will be key buyers of the Lightning, the same customers Lordstown Motors is aiming for.
If Lordstown Motors can emerge from its current problems and become a viable automaker, it would be a great comeback story, but not many people are betting on it.
Other stories about the energy transition to take note of this week.
Ohio Looks to Develop Workforce for ‘Voltage Valley’: Lordstown Motors is part of a larger development effort in the region called ‘Voltage Valley,’ an attempt to rebrand the Youngstown, Ohio, area as a hub for the electric vehicle industry. A job fair this week shows some of the companies that make battery parts and other components for use in EVs, as Kathiann Kowalski reports for Energy News Network. Among the employers is Ultium Cells, a joint venture of GM and LG Energy Solution, which plans to open a battery factory in the region next year. Business leaders are trying to attract companies and workers with the idea that Youngstown has a core competency in manufacturing that is well-suited to nurture growing industries like clean transportation.
General Motors Announces Big Increase in EV Spending: GM keeps raising its target for spending on electric and autonomous vehicles, something it did again on Wednesday with the release of a plan to spend $35 billion by 2025, an increase of 30 percent from the previous investment level. The plan includes the construction of two new battery plants, in addition to the two it already had announced, as Kalea Hall of The Detroit News reports. The company previously said it was building battery plants in Tennessee and the one in the Youngstown area in Ohio. GM is not saying where the two additional plants will be located. “GM is targeting annual global EV sales of more than 1 million by 2025, and we are increasing our investment to scale faster because we see momentum building in the United States for electrification, along with customer demand for our product portfolio,” said GM CEO Mary Barra in a statement.
FERC Says it Will Tackle Electric Transmission by End of Summer: Under the Biden Administration, the Federal Energy Regulatory Commission has a potentially large role to play in advancing the growth of renewable energy. A big part of that is finding ways to encourage the construction of interstate power lines and making sure that the costs are allocated fairly to consumers. FERC Chairman Richard Glick now says the panel will have announcements about its plans “certainly by the end of summer,” according to Catherine Morehouse of Utility Dive. This is a crucial part of developing a grid that can run on large amounts of wind and solar, and it’s also fraught with conflict over costs and local opposition to the lines.
California Cities Try a New Way to Conserve Electricity: Oakland-based OhmConnect is giving away 100,000 “smart” thermostats to residents of Bakersfield, Fresno, Oakland and San Jose. The thermostats allow OhmConnect to remotely make small adjustments to a house’s temperature during times of high demand on the grid. Customers can override the changes if they want, but many won’t notice the difference, which can substantially reduce electricity demand, meaning a lower chance of blackouts and brownouts. OhmConnect is giving 25,000 thermostats to each city and seeing which one can get the most residents to sign up to use them, as KPIX television of San Francisco reports. “The cleanest energy is the energy we don’t use,” said San Jose Mayor Sam Liccardo.
Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to firstname.lastname@example.org.