(Bloomberg) — Lordstown Motors Corp.’s new boss says his biggest job is getting its electric pickup truck ready for production. Until that happens, the company won’t brag about binding orders, a road that has gotten the company in trouble with regulators and investors.
“There are no such thing as firm orders for a vehicle that isn’t on the market yet,” Chief Executive Officer Daniel Ninivaggi said in an interview Thursday. “The company was so tarnished by what happened over the summer that the company was in the penalty box. We have to get back to basics, which is product execution.”
Ninivaggi has a daunting task to reverse course for the company, which ousted founder Steve Burns in June as claims of binding sales orders were called into question and has warned that its status as a going concern was in doubt. The new CEO needs to raise cash, get the Endurance pickup to market and find partners that will help the company make the most of the massive former General Motors Co. factory that it bought in 2019.
He’s looking at all options to raise money, Ninivaggi said, affirming that Lordstown will have between $225 million and $275 million at the end of the third quarter but will need additional capital.
The former Icahn Enterprises executive took over from the temporary management that was installed after Burns resigned. Ninivaggi most recently was on the board of Hertz Global Holdings Inc., in which Icahn was a major shareholder until the rental-car company filed for bankruptcy in 2020. Ninivaggi was a key player in the Hertz’s restructuring.
Lordstown jumped 17% to $6.43 a share at 2:20 p.m. in New York after an earlier gain of as much as 41%. The stock had declined 73% this year through Wednesday’s close. Lordstown went public in November through a merger with a special-purpose acquisition company that netted the startup $675 million.
“The new CEO’s pledge to stop misleading investors will be welcome, but it doesn’t resolve the big question of when or whether the company can deliver trucks,” said University of Michigan business professor Erik Gordon.
Ninivaggi said he took the post at Lordstown because he believes that the company’s truck, with an electric motor at each wheel, is an advantage. He expects there will be high demand for battery-powered pickups in the next several years and few producers with a truck that’s ready to go.
Lordstown remains on schedule to churn out preproduction vehicles in September, he said. The company will then test in December and January, with limited commercial production expected for early 2022 and accelerated production later in the year. Even then, output will be limited, he said, because the company needs to ramp up at a measured pace.
“There aren’t going to be enough vehicles to satisfy demand in the next couple of years,” he said. Lordstown has “a jump on it. There is a narrow window, but there is a window to get out ahead.”
He conceded, though, that even more-established players face challenges making electric vehicles, as GM, Tesla Inc., Volkswagen AG and Hyundai Motor Co., have discovered recently as they grappled with battery fires.
Big Factory
Ninivaggi said that the company’s fortunes ride on making the most of the huge Lordstown plant. At its peak, GM made more than 300,000 of the Chevy Cruze compact at the facility. That dwarfs the 15,000 units that Lordstown said it would be able to produce over the next two years. He said he still wants partnerships with other companies that would make the most of the plant.
“The key to unlocking financial potential is maximizing the value of the Lordstown facility,” Ninivaggi said. “We are exploring a number of alternatives. It could take a number of different forms. That is Job One for me.”
Burns was forced to resign after a short-seller’s report accused the company of overstating binding orders for the Endurance. The company has been under investigation by the Securities and Exchange Commission and the Justice Department after an internal probe concluded that the company had misstated preorders for the Endurance.
With Ninivaggi, Lordstown gains an experienced automotive executive with stints at Lear Corp. and as co-CEO of Federal-Mogul, which Icahn sold to Tenneco Inc. for about $5.4 billion in April 2018. Angela Strand, who had been temporary CEO, will continue as Lordstown’s nonexecutive chair.
The Lordstown, Ohio-based EV maker has been running low on cash as it tries to build its first few production vehicles by the end of September. The company said in a regulatory filing this month that it doesn’t have enough money to fund large-scale production or commercially launch the truck.
While CEO of billionaire Carl Icahn’s holding firm, Ninivaggi oversaw the company’s automotive aftermarket service network and auto-parts distribution business. He is chairman of Garrett Motion Inc., a supplier of turbochargers.
After leaving Icahn Enterprises, Ninivaggi threatened Tenneco with a proxy battle. He reached an agreement regarding its board in March 2020. In 2014 he played a role in bringing Icahn into Hertz, the rental-car company that later sought bankruptcy protection.
(Updates with new CEO comment in second paragraph)
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