Lordstown Motors may open plant for partnerships, new products; Endurance on track for September

LORDSTOWN — Lordstown Motors Corp. may open up its mostly unused manufacturing space for new partnerships on Lordstown-powered products and sales or licensing arrangements on the vehicle’s battery packs and new hub motors technology, executives said Wednesday.

“We’re exploring multiple partnership constructs — that includes contract manufacturing, that includes licensing — in addition to promoting our own vehicle,” said Angela Strand, Lordstown Motors’ executive chairwoman during the company’s second-quarter earnings call Wednesday afternoon.

“Broadly, we’re discussing with multiple [original equipment manufacturers] interested in leveraging the assets we have today,” she added.

That includes Lordstown Motors’ 6.2-million-square-foot plant along Hallock Young Road, for which retooling is now complete, executives announced Wednesday.

The plant’s new battery pack line is “fully commissioned” and its first electric hub motor line has been site commissioned and is being installed, according to a news release. The plant’s general assembly line, which now has a new chassis marriage line, is expected to be ready for production in September, said President Rich Schmidt.

Currently, Lordstown Motors is using about 30 percent of the 650-acre campus, which means there’s “ample room” for partners who want to build their own vehicles using the Lordstown chassis and hub motor “skateboard” or more building space to sell that equipment.

The company plans to prioritize demonstrating and explaining hub motor technology — which has never before been used in a commercially produced vehicle — to the market and investors.

“We believe the more our hub motors are proven out through testing, the more customers will appreciate Lordstown’s unique value proposition,” Strand said.

The startup is still shooting for late September to begin limited production of its all-electric pickup truck, the Endurance. The first vehicles are expected to be delivered to customers early next year. Full-scale commercial production is expected to ramp up in the second quarter of 2022, according to a Wednesday press release.

When asked whether the commercialization timeframe may be too close to electric pickup competitors such as Ford’s, whose electric Ford F-150 Lightning pickup is also expected to enter production next year, Strand said the market for electric pickups is “very large and underserved and there is room for all players.”

Lordstown Motors’ test vehicles have achieved federal motor vehicle safety standards and the company expects a five-star crash rating for the Endurance. Industry veteran Schmidt told investors “to be this far advanced in crash tests in a first pass using a beta vehicle is unique” and a testament to the company.

The company is still actively seeking new investments or partnerships that could include more capital to work with. The company earlier this year warned of a cash crunch that could cause it to shutter next year.

The second-quarter earnings report showed a net loss of $108 million along with capital expenditures of $121 million in the second quarter of 2021. The company had $366 million in cash in its coffers as of June 30.

Executives pointed to a recent $400 million, three-year equity purchase agreement with YA II PN Ltd., managed by hedge fund Yorkville Global Advisors Global LP of New Jersey. Though this agreement acts sort of like a line of credit which can be drawn anytime, it’s dilutive in nature, meaning it weakens existing shares.

Executives said they believe that agreement is the first of “several steps to ensure the company has the financing it needs to succeed to profitability,” Strand said. In the future, management may consider other non-dilutive financing like debt — currently, the company has none — or private strategic investments, she said.

Other developments

• Executives said the first Endurances will be piloted for various early customers, though they declined to name those buyers Wednesday. The Endurance will also be shopped to fleet managers and those in the telecommunications, utility, construction and municipal spheres as commercial production ramps up.
  
  Carter Driscoll, the company’s head of investor relations, declined to specify how Lordstown Motors’ purchasing agreements are structured or specify a number of potential sales “because of the way we’ve discussed our order book in the past,” he said. Those “expanded vehicle purchase agreements” do, however, include some form of deposit, he said. He added he expects demand for the Endurance to outstrip the plant’s production capabilities in the truck’s first couple years on the market.
  
  
  
  
• Lordstown Motors is looking to “refine” the hub motor technology — which is licensed from Slovenian company Elaphe — and develop new models with better torque, towing power and energy efficiency, Schmidt said. “We believe the performance improvement should open up our opportunities set in the commercial space. … Our innovative technologies are leverageable in many different ways for Lordstown,” he said.
  
  
  
  
• The pace the company is setting toward commercial production “will depend on multiple factors,” Strand said Wednesday.
  
  Capital expenditures have exceeded expectations of the prior management team, she said. That spending is expected to jump as high as $400 million, up from $275 million, due to new automotive tool purchases. The company also expects a considerable jump in operating expenses, from $60 million to $105 million, and a slight increase in research and development expenses, to as much as $320 million.
  
  The company expects to have between $225 million and $275 million cash-on-hand by the end of the third quarter, without any new financing, Strand said.
  
  
  
  
• Shares of Lordstown Motors Corp. (NASDAQ: RIDE) closed Wednesday at $5.58, down 4.3 percent from the opening price of $5.85. The stock dipped below $10 in mid-June and it’s down 82 percent since a mid-February peak of $30.75. In the three hours after the latest earnings report was released, shares jumped 31 cents to $5.89, a 5.6-percent bump.

This story was originally published August 12, 2021 at 3:52 AM with the headline "Lordstown Motors may open plant for partnerships, new products; Endurance on track for September."