The drama surrounding Lordstown Motors is reaching a fever pitch as CEO Steve Burns and CFO Julio Rodriguez have resigned from the company.
In an early morning press release, Lordstown declined to say why the pair resigned but noted both resignations are “effective immediately.”
The company went on to say Lead Independent Director Angela Strand has been appointed Executive Chairwoman and will oversee the transition until a permanent CEO is identified. Likewise, Becky Roof has been appointed as the interim Chief Financial Officer.
Also Read: Lordstown Motors Admits It Doesn’t Have Enough Money To Start Production
Former Lordstown CEO Steve Burns
While the automaker is staying tight-lipped about the executive shakeup, David Hamamoto released a statement on behalf of the Board of Directors saying “Lordstown Motors has achieved significant milestones on the path to developing the first and best full-size all-electric pickup truck, the Lordstown Endurance. We thank Steve Burns for his passion and commitment to the company.” Hamamoto went on to reiterate production of the Endurance is slated to begin in September and noted the resignations will allow the company to “put in place a seasoned management team with deep experience leading and operating publicly-listed OEM companies.”
Interestingly, the resignations were announced alongside the release of results from a “special committee investigation” of claims made by Hindenburg Research. It concluded Hindenburg’s claims are “in significant respects, false and misleading.” However, Lordstown admitted “issues regarding the accuracy of certain statements regarding the company’s pre-orders.”
In particular, the report said production of the Endurance is expected to begin in September with customer deliveries slated for the first quarter of 2022. The report went on to say the company has “commenced and plans to complete required regulatory, durability, and Federal Motor Vehicle Safety Standards testing” this year. It also stated the Endurance prototype that caught on fire was an “isolated event” with the root cause determined to be “non-conforming parts on a battery pack that had been manually reworked for assembly on the prototype.”
In regards to pre-orders, Lordstown admitted they were non-binding but said they “repeatedly disclosed” this and “highlighted the risk that pre-orders may not be converted to actual orders.” That being said, they acknowledged paying commissions for pre-orders but said only one entity was contracted for this and they only produced around 1,000 pre-orders.
Furthermore, Lordstown said they made “periodic disclosures regarding pre-orders which were, in certain respects, inaccurate.” The company also acknowledged “One entity that provided a large number of pre-orders does not appear to have the resources to complete large purchases of trucks” and “other entities provided commitments that appear too vague or infirm to be appropriately included in the total number of pre-orders disclosed.”
All of this comes hot on the heels of Lordstown announcing they need additional capital to implement their business plan and if those funds can’t be obtained, there is “substantial doubt as to our ability to continue as a going concern.” The Securities and Exchange Commission is also poking around and will undoubtedly be interested to learn more about the company’s “inaccurate” disclosures.
Wall Street reacted by sending Lordstown stock plunging nearly 20% with it sitting at $9.20 a share as of this writing.