Short-selling firm accuses Lordstown of exaggerating truck pre-orders

Short-selling firm accuses Lordstown of exaggerating truck pre-orders

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The short-selling firm Hindenburg Research has published a new report alleging that startup electric truckmaker Lordstown Motors has been exaggerating customer demand to aid in fundraising. CEO Steve Burns has claimed that Lordstown already has more than 100,000 pre-orders—enough to keep its Ohio factory busy for more than a year once the company starts production. In reality, these pre-orders are non-binding. And Hindenburg claims that some of the supposed customers don’t seem to have the financial resources to make good on their multi-million dollar orders even if they wanted to.

Hindenburg is in the business of selling a company’s stock short and then publishing damaging research about the firm. If the stock falls, the company makes a profit. That strategy seems to be working with Lordstown. As I write this, Lordstown’s stock is down about 15 percent for the day.

The company made its name with a September exposé of another electric truckmaker, Nikola. Hindenburg’s report revealed that a promotional video of the Nikola One truck “in motion” actually showed it rolling down a hill, with the camera tilted slightly so it appeared to be driving on level ground. Nikola’s stock has fallen about 60 percent since Hindenburg published its initial report.

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#cars, #electric-vehicles, #lordstown-endurance, #lordstown-motors

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Lordstown Motors accused of faking EV truck orders by short-seller firm Hindenburg Research

Hindenburg Research, the short-seller firm whose report on Nikola Motor led to an SEC investigation and the resignation of its founder, is targeting another electric vehicle company. This time it’s Lordstown Motors, the Ohio electric automaker that went public after merging with special-purpose acquisition company DiamondPeak Holdings Corp., with a market value of $1.6 billion.

Hindenburg said in a report Friday that it has taken a short position on Lordstown Motors, causing shares to plummet 21%. Shares have recovered slightly and are now down about 15% from the previous day’s trade. Hindenburg’s short position is based on a company that it says has “no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.”

In a report issued Friday, Hindenburg disputes that the company has booked 100,000 pre-orders for its electric pickup truck, a stat shared by Lordstown Motors in January. The short seller says that “extensive research reveals that the company’s orders appear largely fictitious and used as a prop to raise capital and confer legitimacy.” The firm goes further and alleges that Lordstown founder and CEO Steve Burns paid consultants for every truck pre-order as early as 2016 while he was leading Workhorse.

The report also provides photos and a 911 call of an incident in January when a Lordstown prototype vehicle burst into flames during a test drive.

Lordstown Motors could not be reached for comment. TechCrunch will update the article if the company responds.

Lordstown has an interesting history for company that is less than two years old. Lordstown Motors is an offshoot of Burns’ other company, Workhorse Group, a battery-electric transportation technology company that is also publicly traded. Workhorse holds a 10% stake in Lordstown Motors.

Workhorse is a small company that was founded in 1998 and has struggled financially at various points in its lifetime. Most recently, Workhorse lost a bid to become the supplier of electric vehicles to the U.S. Postal Service, which caused shares to fall nearly 15% in the days following the news. Workhorse shares are now hovering around $16.58, down 60% from its record price of $42.96 reached February 4.

Lordstown Motors acquired a 6.2 million-square-foot factory from GM in 2019. The company has said it plans to produce 20,000 electric commercial trucks annually, starting in 2021, at the former GM Assembly Plant in Lordstown, Ohio.

Lordstown revealed its Endurance electric pickup in a splashy and political-leaning ceremony in June 2020. At the time, the company didn’t provide details on the interior, performance or battery of its planned electric pickup truck. The entire second half of the event took a 90-degree turn away from the truck and centered on its special guest, former Vice President Mike Pence, who spoke for 25 minutes about former President Trump’s policies on jobs and manufacturing, China and the COVID-19 response.

Despite those lack of details, Burns told the crowd in June that it had received 20,000 pre-orders. That would mean the entire first year of production would be locked in if every customer who pre-ordered the truck followed through and bought the vehicle. Lordstown Motors said, at the time, that a number of potential customers had sent letters of intent, including AutoFlexFleet, Clean Fuels Ohio, Duke Energy, FirstEnergy, GridX, Holman Enterprises and ARI, Summit Petroleum, Turner Mining Group and Valor Holdings, as well as several Ohio municipalities.

Burns later said pre-orders had reached 100,000. Hindenburg disputes those claims.

From the Hindenburg report:

Our research has revealed that Lordstown’s order book consists of fake or entirely non-binding orders, from customers that generally do not even have fleets of vehicles. According to former employees and business partners, CEO Steve Burns sought to book orders, regardless of quality, purely as a tool to raise capital and confer legitimacy. In addition, we show how, in desperation to claim there was demand for the proposed vehicle, he paid for customers to book valueless, non-binding pre-orders.

We detail conversations with Lordstown “customers” who were eager to explain that the letters of intent (“LOI”s) with the company were “promotional”. Others assured us they were “not committed to anything” and that the pre-order commitment size recorded by Lordstown was “totally impossible”. One CEO at a ‘key’ customer told us our outreach was the first he had heard of any arrangement with Lordstown.

#automotive, #electric-pickup, #electric-vehicles, #lordstown-motors, #tc

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EV rivals Tesla, Rivian unite to target direct sales legislation

Tesla, Rivian, Lordstown Motors and Lucid Motors — potential rivals in the burgeoning EV market — are working together to pass laws that would allow direct sales in at least eight states with another batch of proposed legislation likely being introduced this year.

Passage of such legislation would clear the way for EV giants like Tesla, along with newcomers Lucid and Rivian, which have yet to bring a vehicle to market, to sell directly to consumers. However, Tesla’s cooperation could also cost the company its monopoly on direct sales in some states.

Tesla and a growing number of new EV companies have a different business model than legacy automakers like GM, Ford and Stellantis. Tesla sells vehicles through their own branded stores — similar to how Apple sells its products — and do not have franchised dealerships. The direct sales model has attracted the ire of auto dealers, who benefit from long-established rules in all 50 states that prevent manufacturers with existing franchisees from opening their own dealerships to compete with them. Tesla and other allies argue that because they don’t have franchise dealers, they should be allowed to sell directly to consumers.

“We support our other EV-only manufacturers and their desires to sell direct-to-consumers, to invest, to create jobs and to do that unfettered as we are allowed,” Thad Kurowski, senior policy manager at Tesla, said while testifying in the state of Washington during the House’s Consumer Protection and Business Committee. Washington is one of many states where such legislation is being considered. Tesla has six retail locations in the state.

Similar legislation is being considered in Connecticut, Nebraska, Georgia, New York, Wisconsin, Pennsylvania and Nevada. Some of these states ban all EV manufacturers from directly selling to customers; some only permit Tesla, at the exclusion of other companies, but cap the number of retail stores it can open.

It’s a rare moment of cooperation for EV manufacturers, companies that must contend not only with each other but with legacy automakers for market share. Relations between the companies have not always been so copacetic: Tesla last July filed a lawsuit against Rivian alleging theft of trade secrets and talent poaching. Rivian responded that two of the three claims in the case were nothing more than an attempt to smear its reputation.

Tesla is a veteran of battles with state legislatures over direct sales. At least a dozen states, including Arizona, Colorado and Utah have reversed bans that prevented Tesla from selling directly to consumers either through new legislation or via the courts.

Michigan, home to major automakers GM and Ford, has been a longtime battleground.

Former Gov. Rick Snyder signed a bill in 2014 that was initiated and backed by the Michigan Automobile Dealers Association, banning Tesla from selling directly to consumers in the state. Two years later, Tesla sued the state of Michigan when it denied Tesla a dealership license. The Michigan Legislature last December considered a bill that would have banned all direct sales except for Tesla, an arrangement that allowed the automaker to deliver cars to customers, so long as the vehicle sale and title transfer didn’t occur in the state. That special exception for Tesla was removed from the proposed legislation, a move that would have threatened what little progress it had in the state. At the end, though, the legislation died, leaving Tesla’s arrangement intact.

Lucid is leading the charge in some states where direct sales legislation is being considered, according to Daniel Witt, who worked at Tesla before joining the new EV entrant as a public policy lead. Witt emphasized the bills are the result of efforts from the coalition of EV companies, grassroots lobbying from EV owners and EV enthusiasts and consumer groups. The legislation has also found support from environmental and clean energy groups, which argue that consumer choice and ease of access are key to helping people transition away from internal combustion engine cars.

“Any situation where the door got closed behind Tesla was not a matter of trying to gain a market advantage so much as it was just a product of the negotiations in a given legislature,” Witt said. “By and large, whether it’s New York, or Washington or Connecticut, we’re all rowing in the same direction.”

In a statement to TechCrunch, the Washington State Auto Dealers Association said franchised dealers support the transition toward zero-emission vehicles and want to sell them at their locations. But it said the direct sale bill is a “battle of Main Street vs. Wall Street.”

“Electric vehicle manufacturers perpetuate [the] myth of the middleman when the reality is that they would bear the same costs if they built their own stores, but would ship their revenue to their billionaire investors out of state after the sale is made instead of reinvesting in the community,” the group said.

The organization pointed out that Rivian has garnered $500 million in funding from Ford.

“What would stop Ford from abandoning its dealer network, and shifting the profits dealers generate for the company out of Ford and into greater ownership of Rivian? Or GM from spinning off an EV subsidiary?” the group said in its statement.

EV manufacturers have a long legislative road ahead of them. Bills generally must clear legislative committees and receive majority votes from both the House and Senate before being sent to the governor’s desk to be signed into law.

#automotive, #electric-vehicles, #lordstown-motors, #lucid-motors, #rivian, #tesla, #transportation

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With a reported deal in the wings for Joby Aviation, electric aircraft soars to $10B business

One year after nabbing $590 million from investors led by Toyota, and a few months after picking up Uber’s flying taxi businessJoby Aviation is reportedly in talks to go public in a SPAC deal that would value the electric plane manufacturer at nearly $5.7 billion.

News of a potential deal comes on the heels of another big SPAC transaction in electric planes, for Archer Aviation. If the Financial Times‘ reporting is accurate, then that would mean that the two will soon be publicly traded at a total value approaching $10 billion.

It’s a heady time for startups making vehicles powered by anything other than hydrocarbons, and the SPAC wave has hit it hard.

Electric car companies Arrival, Canoo, ChargePoint, Fisker, Lordstown Motors, Proterra and The Lion Electric Company are some of the companies that have merged with SPACs — or announced plans to — in the past year.

Now it appears that any company that has anything to do with the electrification of any mode of transportation is going to get waved onto the runway for a public listing through a special purpose acquisition company vehicle — a wildly popular route at the moment for companies that might find traditional IPO listings more challenging to carry out but would rather not stay in startup mode when it comes to fundraising.

The investment group reportedly taking Joby to the moon! out to public markets is led by the billionaire tech entrepreneurs and investors Reid Hoffman, the co-founder of LinkedIn, and Mark Pincus, who launched the casual gaming company, Zynga.

Together the two men had formed Reinvent Technology Partners, a special purpose acquisition company, earlier in 2020. The shell company went public and raised $690 million to make a deal.

Any transaction for Joby would be a win for the company’s backers including Toyota, Baillie Gifford, Intel Capital, JetBlue Technology Ventures (the investment arm of the US-based airline), and Uber, which invested $125 million into Joby.

Joby has a prototype that has already taken 600 flights, but has yet to be certified by the Federal Aviation Administration. And the success of any transaction between the company and Hoffman and Pincus’ SPAC group is far from a sure thing, as the FT noted.

The deal would require an additional capital infusion into the SPAC that the two men established, and without that extra cash, all bets are off. Indeed, that is probably one reason why anyone is reading about this now.

Alternatively powered transportation vehicles of all stripes and covering all modes of travel are the rage right now among the public investment crowd. Part of that is due to rising pressure among institutional investors to find companies with an environmental, sustainability, and good governance thesis that they can invest in, and part of that is due to tailwinds coming from government regulations pushing for the decarbonization of fleets in a bid to curb global warming.

The environmental impact is one chief reason that United chief executive Scott Kirby cited when speaking about his company’s $1 billion purchase order from the electric plane company that actually announced it would be pursuing a public offering through a SPAC earlier this week.

“By working with Archer, United is showing the aviation industry that now is the time to embrace cleaner, more efficient modes of transportation,” Kirby said. “With the right technology, we can curb the impact aircraft have on the planet, but we have to identify the next generation of companies who will make this a reality early and find ways to help them get off the ground.”

It’s also an investment in a possible new business line that could eventually shuttle United passengers to and from an airport, as TechCrunch reported earlier. United projected that a trip in one of Archer’s eVTOL aircraft could reduce CO2 emissions by up to 50% per passenger traveling between Hollywood and Los Angeles International Airport.

The agreement to go public and the order from United Airlines comes less than a year after Archer Aviation came out of stealth. Archer was co-founded in 2018 by Adam Goldstein and Brett Adcock, who sold their software-as-a-service company Vettery to The Adecco Group for more than $100 million. The company’s primary backer was Marc Lore, who sold his company Jet.com to Walmart in 2016 for $3.3 billion. Lore was Walmart’s e-commerce chief until January.

For any SPAC investors or venture capitalists worried that they’re now left out of the EV plane investment bonanza, take heart! There’s still the German tech developer, Lilium. And if an investor is interested in supersonic travel, there’s always Boom.

#adam-goldstein, #airline, #baillie-gifford, #canoo, #chargepoint, #co-founder, #corporate-finance, #e-commerce, #economy, #evtol, #federal-aviation-administration, #finance, #fisker, #intel-capital, #investment, #jet-com, #jetblue-technology-ventures, #joby, #joby-aviation, #lilium, #linkedin, #lordstown-motors, #marc-lore, #mark-pincus, #private-equity, #proterra, #reid-hoffman, #reinvent-technology-partners, #software-as-a-service, #spacs, #special-purpose-acquisition-company, #tc, #the-adecco-group, #the-financial-times, #toyota, #transportation, #uber, #united-airlines, #vettery, #walmart, #zynga

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Little-known EV and lidar firms are raising billions in Tesla’s shadow

Red Nikola Two.

Enlarge / The Nikola Two truck drives out on the stage at an April 2019 event. (credit: Megan Geuss)

Lidar startup Luminar is going public, the company announced on Monday. Instead of going with a traditional IPO, Luminar is jumping on the latest Wall Street fad: merging with a special purpose acquisition company (SPAC). Merging with a SPAC allows a startup to go public more quickly, with less paperwork and more certainty about the sale price. The deal gives Luminar, which only expects to sell about 100 lidar sensors this year, a post-money valuation of $3.4 billion.

It’s the latest in a string of companies connected to the electric and self-driving car revolutions that have gone public using a SPAC. Most have found strong interest from investors.

In March, electric truck startup Nikola announced that it would go public with help from a SPAC. By the time the merger concluded three months later, Nikola’s value had shot up seven-fold. It has since settled down to four times the initial sale value. That values Nikola—a company that has yet to deliver a single vehicle to customers—at $14 billion, about half the value of Ford.

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#canoo, #cars, #henrik-fisker, #lordstown-motors, #nikola, #rivian, #tesla

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Electric Vehicle Makers Find a Back Door to Wall Street

Special purpose acquisition companies, or SPACs, are helping them and other fledgling companies raise money and gain coveted stock listings.

#ackman-william-a, #automobiles, #banking-and-financial-institutions, #electric-and-hybrid-vehicles, #initial-public-offerings, #lordstown-ohio, #lordstown-motors, #mergers-acquisitions-and-divestitures, #start-ups, #stocks-and-bonds, #tesla-motors-inc, #trucks-and-trucking

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Lordstown Motors becomes latest EV automaker to use a SPAC to go public

Lordstown Motors, the one-year-old Ohio electric automaker that revealed a pickup truck prototype in June, has reached a deal to merge with special-purpose acquisition company DiamondPeak Holdings Corp, with a market value of $1.6 billion.

The agreement marks the latest company — and electric automaker — to become a publicly traded company through a merger agreement with a SPAC, or blank check company. Electric automakers Nikola Motor and Fisker Inc. have also become public companies through a SPAC over the past two months. Shift Technologies, an online used car marketplace and sensor company Velodyne Lidar, also went public via a SPAC, sidestepping the traditional IPO path.

In this latest SPAC, the combined company will remain on the Nasdaq under a new ticker symbol RIDE. DiamondPeak Holdings Corp. was listed on exchange under the ticker DPHC.

The company said it was able to raise $500 million in private investment in public equity, or PIPE, including a $75 million investment by General Motors. Other institutional investors that joined included Fidelity Management & Research Company, Wellington Management Company, Federated Hermes Kaufmann Small Cap Fund and funds and accounts managed by BlackRock.

The transaction is expected to close in the fourth quarter of 2020. The new combined company’s board will include Steve Burns, the founder and CEO of Lordstown, and David Hamamoto, Chairman and CEO of DiamondPeak.

SPACs have been around for decades and have gone by different names, including “blind pools” and “clean shell companies and blank-check companies. A SPAC is a corporation that has no defined business plan or purpose other than to raise money from public markets to acquire a private company. The SPAC has seen a resurgence in 2020, particularly in the second and now third quarters.

Lordstown has an interesting history for such a young company. Lordstown Motors is an offshoot of Burns’ other company, Workhorse Group, a battery-electric transportation technology company that is also a publicly traded company.  Workhorse is a small company that was founded in 1998 and has struggled financially at various points. Its offshoot, Lordstown Motors, revealed a prototype of an electric pickup truck called Endurance that is aimed at contractors and other buyers in the commercial market.

The plan is to produce 20,000 of these electric commercial trucks annually, starting in the second half of 2021, at the former GM Assembly Plant in Lordstown, Ohio. Lordstown Motors acquired in November the 6.2 million-square-foot factory from GM.

The combined company plans to use about  $675 million of gross proceeds from the SPAC transaction to  fund production of the Endurance. Since the truck’s unveiling, the company has secured pre-orders valued at $1.4 billion (or about 27,000 total pre-orders), according to Burns.

#automotive, #lordstown-motors, #nikola-motor, #spac

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Meet the Lordstown Endurance, a new $52,500 electric work truck

Good news, everyone: the battery electric vehicle market is about to get more crowded. On Thursday, Lordstown Motors unveils the Lordstown Endurance, a new BEV truck aimed at the fleet market. The $52,500 truck goes into production next year in Lordstown, Ohio, at a former General Motors factory, and unlike forthcoming BEV pickups from Tesla and Rivian, this one is aimed squarely at the commercial and fleet market.

If news about a US-made electric pickup geared toward the work truck market sounds familiar to you, that’s understandable. In 2018, we took a look at the Workhorse W-15, a carbon-fiber plug-in hybrid EV work truck that was designed in Ohio. But Workhorse ran into funding problems and decided to shelve the W-15. It also let go its CEO, Steve Burns, who licensed some of the W-15 technology for a new project. That new project was Lordstown Motors, named for the town in Ohio where its factory is located. It’s a factory that built Chevrolet Cruises until it was closed last year in a widely criticized cost-cutting exercise by General Motors. (GM and LG Chem have also chosen Lordstown as the site of a new battery gigafactory.)

It looks like a normal truck

The first thing you notice about the Endurance is that it looks like it was styled to blend in on an American worksite, not to stand out on the surface of Mars. “We really tried to strike a balance on the looks, since we cater to fleets,” Burns told me when we spoke by phone on Wednesday. “We thought, let’s keep the vehicle so that at least it’s a pickup truck. It has a bed and a cab and a hood, but let’s make sure—because a lot of fleets are very proud that they are putting their names on the side of an electric vehicle—let’s make sure folks can point to that and say, ‘Oh, that’s one of those electrics,'” he told me.

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#cars, #electric-pickup-truck, #electric-truck, #lordstown-endurance, #lordstown-motors, #pickup-truck, #truck, #workhorse

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