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Lordstown Motors Has Been Faking Orders, Is Actually 3-4 Years From Production: Research Firm
Lawrence Hodge
Friday 5:30PM
March 12, 2021
https://jalopnik.com/lordstown-motors-has-been-faking-orders-is-actually-3-1846466605/amp
Image: Tony Dejak (AP)
Lordstown Motors was sort of the homegrown hero of recent EV startups: an impressive electric truck designed and built in America with a factory in a place that badly needed the economic and job benefits that come with a company setting up shop. However, everything is not as it seems with Lordstown, if a recent report is accurate.
Around here, we have had our doubts about the company and its promises. The new report, from Hindenburg Research, alleges that Lordstown Motors has misled everyone. Hindenburg Research has been investigating other EV startups lately, namely Nikola.
CEO Steve Burns appears to be at the center of some questionable ethical actions with former employees and “customers” revealing key information.
Image: Lordstown Motors
The report creates a damning timeline of falsehoods and misinformation, starting with a focus on CEO Steve Burns. Hindenburg spoke with former employees of both Lordstown and Workhorse. Workhorse Group is a manufacturing company in Ohio formerly headed by Burns. He resigned from Workhorse in February of 2019.
Former Workhorse employees told Hindenburg that Burns was forced out for “...wasting R&D money and missing deadlines.” What was he doing with his time? While the company wanted to, you know, actually build trucks, he was too distracted with his own projects and the company’s drone program.
Four months after leaving Workhorse, Burns founded Lordstown. How he was able to do that so quickly is uncertain. What is known, though, is that the Endurance was originally created by Workhorse, which scrapped it when Burns left. Somehow, Burns entered into an agreement with Workhorse to buy the intellectual property rights to the truck, and he renamed it Endurance. But a former Workhorse employee said that almost none of these rights were actually shared. From Hindenburg:
Image: John Minchillo (AP)
Not long after that, Lordstown announced that it had reached a deal to buy the recently shuttered GM plant in Lordstown, Ohio, using a $40 million loan from GM. The plant’s closure had hit the city and region hard. With Lordstown swooping in, it brought hope. Lordstown said it would be hiring the same number of workers that had worked there previously.’
Image: Evan Vucci (AP)
This piqued the interest of politicians, including President Trump, who used this as one of his examples of bringing jobs back to America. Vice President Pence was sent to the unveiling of the Endurance last summer. Trump invited Burns to the White House in September 2020 to promote the truck and the jobs being brought back to the area.
While the parade of positives was happening, behind the scenes lies were being created. The report goes into Lordstown’s orders with Hindenburg determining that they are fake or do not represent actual agreements to buy. Keep in mind that Burns was making the media rounds claiming that the company had 100,000 preorders:
Orders, except they’re not
Many if not most of these orders aren’t actually orders. Hindenburg calls them “mirages.” Hindenburg spoke with a number of these customers. The research indicates that the pre-orders weren’t actually pre-orders. They are nonbinding letters of intent to purchase, essentially a piece of paper saying customers intend to purchase but aren’t contractually obligated to do so.
No one had actually seen Lordstown’s pre-order agreement. Luckily a copy was given to Hindenburg by a former Lordstown employee. Notice the highlighted areas.
Image: Hindenburg Research
One of the big pre-orders was from a company called E Squared Energy Advisors. As recently as Christmas Eve 2020, Lordstown was bragging about the company placing a pre-order of 14,000 vehicles. That would be unlikely, though, as Hindenburg discovered that E Squared isn’t a registered corporation. It’s a company with two employees and an address that’s the apartment of the company’s CEO in Frisco, Texas. When Hindenburg contacted E Squared’s CEO and asked if the company had a fleet, he gave an answer that doesn’t make much sense:
How can you provide something you don’t have? How is it a hybrid of a lease but it’s not?
Another company called Innervations LLC is an even sketchier operation. In April of last year, the company placed a 1,000-truck order valued at $52.5 million. That’s impressive, as records show that the company was founded in December 2019, a mere four months before this huge order. It gets worse, as the company operates out of a virtual office. Its physical address is a UPS store in Hernando, Florida.
Another company’s preorder was touted for publicity and under different intent than what the company agreed to. Lordstown announced in March of last year that Clean Fuels Ohio had agreed to buy 500 Endurance trucks. But the company is a nonprofit. And after speaking to Hindenburg, Clean Fuels executive director Sam Spofforth stated that the nonprofit never agreed to buy vehicles. They were only supposed to encourage purchases and educate fleet buyers on the benefits of the electric trucks:
Per a lawsuit filed by one such consultant, the company was paying $30 for each no-commitment, $0 down, non-binding Letter of Intent — and calling them orders. The lawsuit reveals that several orders Lordstown identifies as key, including Duke Energy, Ryder and Clean Fuels Ohio, were solicited through such arrangements.
The payments for these “orders” increased to $50 each leading up to the company going public in late 2020.
The rest of the report is just as shocking, noting irregularties like:
Lawrence Hodge
Friday 5:30PM
March 12, 2021
https://jalopnik.com/lordstown-motors-has-been-faking-orders-is-actually-3-1846466605/amp
Lordstown Motors was sort of the homegrown hero of recent EV startups: an impressive electric truck designed and built in America with a factory in a place that badly needed the economic and job benefits that come with a company setting up shop. However, everything is not as it seems with Lordstown, if a recent report is accurate.
Around here, we have had our doubts about the company and its promises. The new report, from Hindenburg Research, alleges that Lordstown Motors has misled everyone. Hindenburg Research has been investigating other EV startups lately, namely Nikola.
CEO Steve Burns appears to be at the center of some questionable ethical actions with former employees and “customers” revealing key information.
The report creates a damning timeline of falsehoods and misinformation, starting with a focus on CEO Steve Burns. Hindenburg spoke with former employees of both Lordstown and Workhorse. Workhorse Group is a manufacturing company in Ohio formerly headed by Burns. He resigned from Workhorse in February of 2019.
Former Workhorse employees told Hindenburg that Burns was forced out for “...wasting R&D money and missing deadlines.” What was he doing with his time? While the company wanted to, you know, actually build trucks, he was too distracted with his own projects and the company’s drone program.
Four months after leaving Workhorse, Burns founded Lordstown. How he was able to do that so quickly is uncertain. What is known, though, is that the Endurance was originally created by Workhorse, which scrapped it when Burns left. Somehow, Burns entered into an agreement with Workhorse to buy the intellectual property rights to the truck, and he renamed it Endurance. But a former Workhorse employee said that almost none of these rights were actually shared. From Hindenburg:
Not long after that, Lordstown announced that it had reached a deal to buy the recently shuttered GM plant in Lordstown, Ohio, using a $40 million loan from GM. The plant’s closure had hit the city and region hard. With Lordstown swooping in, it brought hope. Lordstown said it would be hiring the same number of workers that had worked there previously.’
This piqued the interest of politicians, including President Trump, who used this as one of his examples of bringing jobs back to America. Vice President Pence was sent to the unveiling of the Endurance last summer. Trump invited Burns to the White House in September 2020 to promote the truck and the jobs being brought back to the area.
While the parade of positives was happening, behind the scenes lies were being created. The report goes into Lordstown’s orders with Hindenburg determining that they are fake or do not represent actual agreements to buy. Keep in mind that Burns was making the media rounds claiming that the company had 100,000 preorders:
Orders, except they’re not
Many if not most of these orders aren’t actually orders. Hindenburg calls them “mirages.” Hindenburg spoke with a number of these customers. The research indicates that the pre-orders weren’t actually pre-orders. They are nonbinding letters of intent to purchase, essentially a piece of paper saying customers intend to purchase but aren’t contractually obligated to do so.
No one had actually seen Lordstown’s pre-order agreement. Luckily a copy was given to Hindenburg by a former Lordstown employee. Notice the highlighted areas.
One of the big pre-orders was from a company called E Squared Energy Advisors. As recently as Christmas Eve 2020, Lordstown was bragging about the company placing a pre-order of 14,000 vehicles. That would be unlikely, though, as Hindenburg discovered that E Squared isn’t a registered corporation. It’s a company with two employees and an address that’s the apartment of the company’s CEO in Frisco, Texas. When Hindenburg contacted E Squared’s CEO and asked if the company had a fleet, he gave an answer that doesn’t make much sense:
How can you provide something you don’t have? How is it a hybrid of a lease but it’s not?
Another company called Innervations LLC is an even sketchier operation. In April of last year, the company placed a 1,000-truck order valued at $52.5 million. That’s impressive, as records show that the company was founded in December 2019, a mere four months before this huge order. It gets worse, as the company operates out of a virtual office. Its physical address is a UPS store in Hernando, Florida.
Another company’s preorder was touted for publicity and under different intent than what the company agreed to. Lordstown announced in March of last year that Clean Fuels Ohio had agreed to buy 500 Endurance trucks. But the company is a nonprofit. And after speaking to Hindenburg, Clean Fuels executive director Sam Spofforth stated that the nonprofit never agreed to buy vehicles. They were only supposed to encourage purchases and educate fleet buyers on the benefits of the electric trucks:
Per a lawsuit filed by one such consultant, the company was paying $30 for each no-commitment, $0 down, non-binding Letter of Intent — and calling them orders. The lawsuit reveals that several orders Lordstown identifies as key, including Duke Energy, Ryder and Clean Fuels Ohio, were solicited through such arrangements.
The payments for these “orders” increased to $50 each leading up to the company going public in late 2020.
The rest of the report is just as shocking, noting irregularties like:
- Customers not aware that they had entered any kind of agreement with Lordstown.
- A telling pattern of customers that just happened to be small companies local to the area with no known history of ever operating fleets.
- Companies placing orders as a favor to Burns when he was CEO of Workhorse. These trucks were supposed to be delivered in late 2018.
- Production promises that are never met and are always changing.
- The mess of the recent prototype bursting into flames.
- The company’s hub motors (a core part of the Endurance) being licensed from a small company in Slovenia.
- Industry experts saying the hub technology could be problematic.
- A former employee saying that changes have been made to prototypes but no government testing has been done for certification. Production is actually three to four years down the road — if things come together.
- Despite Burns saying the batteries are being made in-house, they aren’t.
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