Just days after Lordstown Motors said it didn’t have enough cash to launch its electric pickup truck production and might not be able to stay in business, its founder and executive team resigned.
The startup said Monday that Chief Executive Steve Burns, and Julio Rodriguez, its chief financial officer, have left the company. Burns also resigned from the Lordstown board. It disclosed the cash problems last week in a regulatory filing.
“Management change is an important first step for the company to move forward. We felt it was untenable for the company to secure necessary new capital with a management team widely seen as potentially not leading the company into the next era of its development,” said Adam Jonas, a Morgan Stanley Research analyst, in a report to investors Monday.
Lordstown launched with a bang when it said last year it had a deal to acquire the Lordstown factory from General Motors and that the automaker would invest in the company. Then-President Trump praised the transaction as an example of the durability of U.S. manufacturing. But while Lordstown took control of the factory, the rest of the deal with GM fell apart. It gained notice again with a successful merger with a special purchase acquisition corporation last year that sent the newly minted stock RIDE soaring. But the latest news sent Lordstown stock plunging by about 20 percent to just over $9. That’s about a third of its high in September of last year.
It also became the subject of a report questioning its order book and other aspects of the company’s operations from short-seller Hindenburg Research.
The company said the board named lead independent director Angela Strand executive chairwoman. Strand will oversee the organization’s transition until a permanent chief executive is hired. It named Becky Roof as interim chief financial officer. Lordstown also hired an executive search firm to recruit a permanent chief executive and chief financial officer.
Strand is the managing director of Strand Strategy, an advisory firm specializing in technology, business strategy and organization development.
Jonas said Lordstown still has potential if it can solve technology issues and launch a reboot. He said it faces problems with its plan to locate motors inside the hubs of its Endurance pickup truck.
“While a change of architecture would add as much as a year or two to the start of production, we believe moving to an alternative motor strategy or an entirely different product and go-to-market strategy altogether may be required to preserve sustainable equity value. It is our understanding that Steve Burns was the primary proponent of the hub motor system,” Jonas said.
Burn is out of the management team but still could have considerable influence. Jonas said Burns is the single largest Lordstown shareholder, holding a 26.25 percent stake as of the amended 10-K filed June 8.
“Investors should anticipate volatility around pre-orders, pre-production milestones and strategic partnerships during this transition period,” he said.
But Lordstown also faces stiff competition in the electric pickup truck market from established automakers. Ford plans to launch an electric version of its popular F-150 pickup truck next year and has one configuration that targets fleets. Lordstown was going to focus on commercial buyers. Chevrolet is planning an electric version of its Silverado truck. Tesla also plans to launch production of its Cybertruk, also an electric pickup.