Washington Insider: Trouble at Lordstown Motor

Source: By DTN's Washington Insider • Posted: Tuesday, June 15, 2021

The former General Motors plant in Lordstown, Ohio, emerged as a potential star in the electric vehicle show. Lordstown Motors took over the plant with a plan to build electric pickups there, the Endurance.

But high hopes that accompanied the effort have not been met. A prototype of the truck burned down in testing in February.

Then last week reports surfaced that the company had told investors they had thousands of “pre-orders” for the truck, including from those companies that run big fleets. But the New York Times noted that a report in March from Hindenburg Research had resulted in a push “to bring these companies public well before they were ready and in many cases some of these companies will never be ready.”

To open this week, Lordstown’s founder Steve Burns, and the company’s chief financial officer, Julio Rodriguez, resigned. “An investigation by Sullivan & Cromwell, a law firm hired by a special committee of Lordstown’s board, the results of which were disclosed on Monday, confirmed ‘issues regarding the accuracy of certain statements regarding the company’s pre-orders,'” the Times reported.

Now the Securities and Exchange Commission is investigating the situation, including on a merger of the firm with DiamondPeak plus the sales orders.

The company is expected to hold an event at its factory to tell investors and others about its pickup truck.

But Lordstown is not the only startup in the electric vehicle world that has had problems.

By contrast, there is Tesla that has gathered a global following for its electric cars.

But the question that comes now is can these startups really survive or will be the electric vehicle market be dominated by automakers already in operation — Ford recently demonstrated an electric version of its F-150 pickup to President Joe Biden.

This still means that electric vehicles have a future in the U.S. automotive fleet. However, those seeking to “cash in” on the trend should take note of what has unfolded with Lordstown and others — something that has applied to any business and that is you have to have a product to sell and one that buyers trust.

That’s what the challenge is ahead. And that doesn’t even get into issues surrounding the range or battery charging times that still represent some of the biggest hurdles that companies seeking to broaden the electric vehicle market will have to address.

Events like those with Lordstown suggest that perhaps the timeline for the electric vehicle to push the internal combustion engine out of favor with consumers is now further down the road. That probably is giving some relief to those in the biofuel sector as those fortunes are at least currently tied to motor fuel consumption. This means the challenge ahead for the biofuel industry will be to convince policy-makers and others that their fuel can be a big contributor to lowering emissions ahead of when electric vehicles reach a point of gaining that market share they need to truly make a difference on emissions.

So we will see. Struggles by these startups are not unique to electric vehicles as there are always those who game the system. But the situation is still one that should be closely monitored, especially be a sector where corn and soyoil use in fuels is so important, Washington Insider believes.