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Lordstown Motors Fears It May Go Bust If It Does Not Get Urgent Funding

It seems things for Lordstown Motors are not as bright as its CEO recently told investors. When John Murphy, from the Bank of America, asked Steve Burns how he felt with the Ford F-150 Lightning competition, he said it actually validated the conventional looks of the Lordstown Endurance. The issue is that, without the necessary funding, his company may never be able to prove that.
Lordstown Endurance Prototype After Fire 10 photos
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Green Car Reports discovered an amendment to Lordstown Motors’s SEC (US Securities and Exchange Commission) Form 10-K for the 2020 fiscal year. In that document, the company states that it will have to “manage costs and obtain additional funding” as a condition to avoid the “going concern” for its “ability to continue.” All these euphemisms try to mitigate the impact of the candid expression for them: without more money, Lordstown Motors may go bust.

That would be a pity, especially for Lordstown, the city that gave this company a name. That all started when GM decided to close its factory there, and its workers got worried about their future. Donald Trump criticized GM for that, demanding it to close plants abroad – not in the U.S. – and saying “bring jobs home.”

GM then sold its factory to Lordstown Motors for $20 million, loaned $40 million to the startup, and released it from its mortgage obligations when Lordstown Motors merged with DiamondPeak Holdings, a SPAC (Special-Purpose Acquisition Company). The process is used to avoid IPOs and helped it raise more than $600 million. Apparently, that was not enough.

The hard times for Lordstown Motors started after its very first prototype caught fire ten minutes after beginning tests on a public road. A while later, Hindenburg Research accused Lordstown Motors of artificially inflating its reservation numbers. The EV startup is currently under investigation by SEC because of that.

It is unclear if investors will keep backing up Lordstown Motors. GM already gave up a partnership with Nikola Motors after Hindenburg Research also accused it of wrongdoings. It would then depend on other funding sources, such as a US DOE (Department of Energy) ATVM (Advanced Technology Vehicles Manufacturing) loan. Back in January, Burns said his company was not reliant on it. Now, it may be crucial for its survival.

 
 
 
 
 

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