# Lordstown Motors (2018 – 2023)

- URL: https://girisimcikafasi.com/en/startup-graveyard/lordstown-motors/
- Sector: Mobility and transport
- Country: United States
- Total funding: unknown
- Cause of closure: Ran out of cash

## What did it do?

Lordstown Motors was an automotive start-up that set out to build electric pickups in General Motors' former assembly plant in Lordstown, Ohio. It was founded in 2018 by Steve Burns, former CEO of Workhorse Group, and became known for its Endurance electric pickup. The company began trading on NASDAQ in 2020 through a SPAC merger.

## Why did it shut down?

In March 2021 the short seller Hindenburg Research published a report alleging that the company had exaggerated its order book and production capability, and the SEC requested information. An independent review commissioned by the board found that pre-order agreements had been overstated in both number and seriousness; the CEO and the chief financial officer resigned in June 2021. That same month the company disclosed that it lacked the money to start series production and was at risk of going bankrupt. It sold the plant to Foxconn and made it its contract manufacturer, but the additional USD 170 million investment Foxconn had promised never materialised. In June 2023 Lordstown sued Foxconn and filed for Chapter 11.

## The story

In November 2019 General Motors handed its idle Lordstown plant in Ohio to a new electric vehicle start-up that bore the town's name. GM lent the company USD 40 million to cover a substantial part of the purchase. Closely watched in political circles as well, the sale was presented as a fresh hope for the region's industry.

Lordstown Motors had been founded in 2018 by Steve Burns, former CEO of Workhorse Group. In March 2020 the company paid Workhorse USD 12 million to license the intellectual property for its W-15 pickup and built its Endurance electric pickup on that design. In 2019 the vehicle was expected to go on sale at the end of 2020 for USD 52,500. GM invested USD 75 million in the company in 2020. In October 2020 Lordstown merged with a SPAC called DiamondPeak Holdings and began trading on NASDAQ; the deal gave the company an equity value of around USD 1.6 billion.

In March 2021 the short-selling research firm Hindenburg Research published a report alleging that Lordstown's thousands of orders consisted of non-binding expressions of interest with no deposits, and that the company had exaggerated its production capability. The company said it would rebut the report; the SEC requested information. An independent review commissioned by the board found that pre-order agreements had been overstated in both number and seriousness. In June 2021 the company disclosed that it lacked the money to start series production and was at risk of going bankrupt; Burns and the chief financial officer resigned.

Rescue seemed to come from Foxconn. In October 2021 the plant was sold to Foxconn for USD 230 million, and Foxconn became a partner that would build the Endurance under contract; in November 2022 it pledged a further USD 170 million investment. But that money never arrived. In June 2023 Lordstown sued Foxconn for failing to honour its commitment, filed for Chapter 11 and halted Endurance production. Its electric vehicle assets were sold in September 2023 for USD 10 million to LAS Capital, majority-owned by founder Burns. What remained of the legal entity emerged from bankruptcy in March 2024 under the name Nu Ride, with the purpose of pursuing its legal claims against Foxconn.

Lordstown's story shows how costly it is when the narrative runs ahead of production in a capital-intensive industry. Going public while the orders were non-binding and the cash needed for production was missing merely made the company more visible.

## Lessons

- Do not present non-binding letters of intent as orders; report firm orders and expressions of interest to investors separately.
- In a capital-intensive business such as carmaking, work out up front the total cash you need to reach series production; going public does not make that need disappear.
- If your plan rests on a critical partner's investment commitment, write into the contract in advance what happens if that commitment is not honoured.

## Sources

- [Nu Ride Inc.](https://en.wikipedia.org/wiki/Nu_Ride_Inc.)
- [Lordstown Motors files bankruptcy, sues Foxconn](https://www.reuters.com/business/autos-transportation/lordstown-motors-files-bankruptcy-sues-foxconn-2023-06-27/)
- [Lordstown Motors shares close down 13.8% after confirming SEC inquiry](https://www.cnbc.com/2021/03/18/lordstown-motors-shares-fall-as-much-as-12percent-after-confirming-sec-inquiry.html)
- [Lordstown Motors comes out of bankruptcy with a new name to fight Foxconn](https://techcrunch.com/2024/03/15/lordstown-motors-nu-ride-chapter-11-foxconn/)
- [https://www.wikidata.org/wiki/Q86681792](https://www.wikidata.org/wiki/Q86681792)