CEO, CFO of Electric Truck Startup Lordstown Motors Abruptly Resign
Electric truck startup Lordstown Motors on Monday announced the sudden departure of Chief Executive and founder Steve Burns and Chief Financial Officer Julio Rodriguez.
Burns is Lordstown's largest shareholder with a stake of more than 26%, according to Refinitiv data viewed by Reuters.
Lordstown Motors Lead Independent Director Angela Strand has been appointed interim Executive Chairwoman of the Company, and will oversee the organization's transition until a permanent CEO is identified, the company said.
"We remain committed to delivering on our production and commercialization objectives," Strand said in a statement.
Lordstown said its current president Rich Schmidt will continue to oversee all day-to-day operations, including manufacturing and engineering. Schmidt was promoted to company president in November having previously served as Lordstown's Chief Production Officer. He was a former director of manufacturing at Tesla before joining Lordstown.
The departure of founder Burns comes just days after the electric truck maker warned that it may not have enough money to stay in business over the next year, sending shares down more than 20% in early trading to $9.12. The stock has lost roughly two thirds of its value since February when it was trading over $30.
Last week, Lordstown Motors said that there is "substantial doubt" that it can continue operations without an influx of new capital, which seems increasingly unlikely to happen as investors dump the company's shares.
"The company believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles," Lordstown wrote in a quarterly filing with the U.S. Securities and Exchange Commission.
The resignations of founder Steve Burns and Rodriguez come as the company's board reported conclusions from an internal investigation into claims made by short-seller Hindenburg Research, which accused Lordstown Motors of overstating the viability of its technology and misleading investors about production plans of the Endurance electric pickup.
Lordstown Motors however, rejected Hindenburg's accusations as false.
Lordstown Motors unveiled the Endurace pickup last June. The company said the battery-powered Endurance gets the gasoline equivalent of 75 mpg.
In Oct 2020, Lordstown launched its IPO in a reverse merger deal with blank-check company Diamond Peak Holdings. The company's shares trade on the NASDAQ under the stock symbol "RIDE."
In March, Hindenburg disclosed it had taken a short position in Lordstown shares, saying the company had misled consumers and investors.
Subsequently, the U.S. Securities and Exchange Commission (SEC) had asked the company for information related to its SPAC merger and pre-orders of its vehicles.
When it announced its deal to go public through a reverse merger last August, Lordstown said it had pre-orders for its Endurance pickup truck worth about $1.4 billion. During the unveiling event for the Endurance, Burns said that it had already sold out the first production run of 14,000 Endurace pickups.
Hindenburg accused Lordstown of misleading investors on the pre-orders. The company said the orders were non-binding and has since said it has no binding orders for the electric Endurace pickup, which is targeted at commercial customers.
Like Tesla, Lordstown Motors is one of the few EV startups with its own auto factory. The company announced in November 2019 it acquired General Motors' shuttered 6.2 million square foot Lordstown assembly plant in Ohio.
GM announced it was closing its Lordstown, Ohio factory in Nov 2018 as part of a larger company-wide restructuring plan to trim expenses, including a shift from building sedans to more profitable SUVs and pickups.
However, rather than let the plant sit idle, GM agreed to loan Lordstown Motors up to $40 million to retool the plant and get it ready for electric vehicle production, so the company could begin its ambitious plan of building its electric Endurance pickup. GM also took a stake in the company with a $75 million investment.
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