Lordstown Motors (RIDE) Rebuffs Hindenburg’s Allegations Amid Uncanny Similarity To the Nikola Corporation (NKLA) Debacle of Last Year
Lordstown Motors (NASDAQ:RIDE), a manufacturer of light-duty commercial EVs, is currently in the proverbial eye of a major storm.
To wit, Hindenburg Research issued its most damning report to date against Lordstown Motors last Friday. The explosive report contended that Lordstown’s order book, consisting of over 100K pre-orders for its Endurance electric pickup truck, is "almost entirely fake". As evidence, Hindenburg cited the fact that Endurance reservations require no deposit and that Letters of Intent (LOIs) for future purchase are non-binding and originate from customers that lack the ability to pay for those orders. In another major allegation, Hindenburg pointed to the recent conflagration that engulfed an Endurance truck during preliminary testing to conclude that the product is nowhere close to mass production at the moment.
Today, Lordstown Motors has fired back with a brief statement of its own:
“Lordstown Motors remains on track for [the] start of production of its Lordstown Endurance all-electric pickup truck in September 2021. This week, the company intends to elaborate on its progress towards [the] start of production, including providing an update on beta vehicle production and other important business developments, on its inaugural earnings call. The call will be held on March 17th at 4:30 pm ET.”
Over the weekend, Tim Grosse – the CEO of E Squared Energy which has ordered 14,000 Endurance trucks totaling around $735 million – came to the rescue of Lordstown Motors. He stated:
“I think it’s obvious what the report was intended to do.”
While adding that his company plans to fill all of its Lordstown Motors orders, Mr. Grosse noted:
“We’re a legitimate service program. We buy vehicles for municipalities and customers who don’t have large budgets to switch to EVs.”
Moreover, the CEO of Lordstown Motors, Steve Burns, gave an interview to Wall Street Journal recently. In the interview, Mr. Burns conceded that his company paid consultants to generate order flow for its products but noted that the rationale behind this move was to assess market demand.
Of course, this saga is starting to resemble the infamous downfall of Nikola Motors (NASDAQ:NKLA) last year. In that case as well, Hindenburg unearthed explosive instances of deception, including the fact that the Class 8 electric truck showcased in the “Nikola One in Motion” video by the company was actually cruising down a slope without any onboard propulsion.
In the meantime, questions abound. For example, if Lordstown Motors paid to generate some of its order flow, why were these fake orders included in the official pre-orders for the Endurance pickup trucks? Additionally, how can the company start to mass-produce these trucks if it is still constructing them by hand? Lordstown Motors’ earnings call later this week is likely to provide a lot more clarity on these troubling questions. Stay tuned!