6. Unpacking the Lordstown Motors fiasco
Lordstown Motors is the quintessential business fiasco. Equal parts hubris, political pandering and regulatory failure, Axios' Dan Primack writes.
Why it matters: There's no indication that anyone will learn their lesson, except perhaps for some random retail investors who didn't diversify.
Catch up fast: General Motors in early 2019 shut a manufacturing plant in Lordstown, Ohio, where around 4,500 workers had been making the Chevy Cruze.
It soon sold the facility to an electric truck startup for around $16 million, with the newly named "Lordstown Motors" financing the purchase via a loan from GM.
- The company in 2020 went public via SPAC at a $1.6 billion valuation, despite having never made or sold one of its vehicles.
- Short seller Hindenberg Research pounced in March, arguing the company had faked pre-order information.
What's new: Last week, Lordstown Motors said it doesn't have enough cash to begin production. Then, this week, it canned its CEO and CFO, after basically copping to what Hindenberg had claimed.
- Then it reversed course, claiming it does have enough money to begin production this year. Lordstown stock is down more than 66% from February.
Quick take, via Axios' Joann Mueller: Lordstown's chances of survival are slim, but president Rich Schmidt, a Toyota veteran who later worked for Tesla, knows that underdog feeling.
His plan, outlined Tuesday: Pull out all the stops to launch production in September, then hope they can raise more capital before they're projected to go broke in May 2022.
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