The Securities and Exchange Commission asked Lordstown Motors for more information on allegations that the EV startup has misled investors about its progress so far. Lordstown Motors said on Wednesday that it is cooperating with the investigation and that its board of directors has created a special committee to review the allegations. The startup is supported by General Motors, which sits on the board.
The allegations came last Friday from short selling company Hindenburg Research, which released along with the report that it had taken a short position with Lordstown Motors. The company previously released a report on the hydrogen transport startup, Nikola, which likewise led to investigations by the SEC and the Department of Justice. (General Motors also planned to bet on Nikola before this report.)
Hindenburg said in the report that some of the EV startup’s biggest orders were placed by companies that don’t seem to have the money to buy large batches of the Lordstown Motors electric pickup, which starts at around $ 50,000. Hindenburg also said that Lordstown Motors deceived the public, investors and the government about the progress made so far in the prototypes of its Endurance electric truck, and pointed to a recent fire as evidence.
“We want to take a moment and acknowledge that we are aware of the short seller’s report,” said CEO Steve Burns in a earnings conference call on Wednesday, before releasing the SEC investigation and internal review. “That is all we can say, and we cannot comment on it during the question and answer period after this conference call, or any follow-up questions and conversations, until the special committee finishes its review.”
Lordstown Motors went public in late 2020 as part of a merger with a special purpose acquisition company, or SPAC, and raised $ 675 million in cash. Wednesday’s earnings conference call was the startup’s first with investors as a public company. Shortly before that, the company reported that it lost $ 101 million in 2020, but ended the year with $ 630 million in cash.
Burns said earlier that the Hindenburg report was full of half-truths and lies, according to Wall Street Newspaper. “There are always enemies,” he said on Monday, according to the local agency WKBN. “I quoted Taylor Swift to someone the other day: ‘Hateurs are going to hate, hate, hate, hate, hate. You have to get rid of it. “
The SEC investigation and internal review are not slowing Lordstown Motors, at least not yet. The startup said Wednesday that it is accelerating the development of a second vehicle: an electric van. Burns also said that Lordstown Motors remains committed to shipping the first Endurance electric pickup trucks next September at the Lordstown, Ohio facility that the startup bought from General Motors in 2019 – a deal that has been praised by the Trump administration.
Lordstown Motors only aims to sell commercial fleets in the short term for Endurance, but the startup is racing to bring the electric pickup to the market so that it can be the first produced on a large scale. Startup is at an advantage compared to some of its peers because it basically started with a factory installed.
Burns said on Wednesday that he believes Endurance will be an attractive option for state and local governments, especially following President Biden’s push to electrify the federal fleet. He also said the military was interested, although he did not disclose details.
“Everyone feels that demand is not going to be our problem,” Burns said. “There is no company on planet Earth within six months of entering mass production – not manual construction – the mass production of a life-size electric pickup truck.”