Lordstown Motors Accused of ‘FAKE Orders, Undisclosed Production Hurdles’

“Those jobs have left Ohio. They’re all coming back. … Don’t move. Don’t sell your house,” – Trump said at a 2017 Youngstown rally.

Lordstown Motors Corporation is an American electric automobile manufacturer. The company is located in Lordstown, Ohio, and is based at the former GM Lordstown auto plant. In November 2019, Lordstown Motors signed a deal to buy the old GM plant with a $40 million loan from GM. GM now has $75 Million “invested” in the new company.

Hindenburg Research,  an investment research firm that focuses on short-selling, released a story about Lordstown Motors, Friday, March 12, with a headline that reads: ‘The Lordstown Motors Mirage: Fake Orders, Undisclosed Production Hurdles, And a Prototype Inferno.’ (“Prototype Inferno” refers to the pickup catching fire last month.)

Hindenberg in its article alleges that Lordstown Motors orders for nearly 100,000 pre-orders of its Endurance electric truck are ‘largely fictitious’ and misled the public, government regulators and investors on the progress of its upcoming truck.

Phil LeBeau, a reporter for CNBC, noted that Hindenburg is short selling Lordstown Motors and would stand to profit from this. LeBeau added that “Hindenburg’s research last year exposed Nikola late last year… so they have credibility and a track record Wall Street pays attention to.”

WFMJ Youngstown

Hindenburg’s report described Lordstown Motors’ order book as a “mirage” and, among other accusations, said it paid an outside consulting group to generate preorders for its truck in advance of its deal to go public in 2020.

Lordstown Motors Chief Executive Steve Burns, confirmed the company paid consultants to generate preorders that were understood to be non-binding as a way to assess market demand, but denied it misrepresented its preorder book.

In a regulatory disclosure in December, Lordstown Motors said it didn’t have any current customers or pending orders, and there was no assurance the nonbinding preorders will be converted to sales. In a January news release, Lordstown Motors said the more than 100,000 reservations for its Endurance truck were nonbinding.

WSJ

The Hindenburg Research report alleges Lordstown Motors’ book of orders appears to be “almost entirely fake” and / nonbinding, which represents “no genuine demand” for the truck. It also claims Lordstown Motors at times paid for the nonbinding orders, then used the “fictitious demand to fuel financing rounds and to confer an aura of credibility on the company.”

The report also questions a deal for 14,000 trucks from Texas-based E Squared Energy Advisors, claiming the company has two employees, is run out of an apartment and does not operate a vehicle fleet.

The report also cites Innervations LLC, which the report states placed an order for 1,000 trucks in April, having a Regus Virtual Office and listing its mailing address at a UPS store in Hernando, Fla. According to a company official in the report, Innervations doesn’t plan to purchase, but rather promotes the company and directs it to other companies interested in purchasing trucks.

The Youngstow Vindicator

Also from the Hindenburg Research report:

◾️One company rep that committed to buy 40 trucks through Climb2Glory told us: “…I’m not committed to anything, not to buying a single vehicle. I committed to consider buying vehicles. I’d have a lot of questions before I commit to anything.”

◾️Yet another firm that is supposedly set to buy 500 trucks from Lordstown told us: “…The letters of interest are non-binding. It’s not like you’d obligate yourself to a pre-order or that you would contractually bind yourself to buying this truck. That’s not what they are.”

◾️Multiple former senior employees who have worked with Lordstown Founder & CEO Steve Burns openly described him as a “con man”, or a “PT Barnum” figure. 

◾️Despite claims that Lordstown will be producing vehicles by September, a former employee explained how the company is experiencing delays and making “drastic” design modifications, putting them an estimated 3-4 years away from production. For example, in mid-January the company “totally switched from a plastic exterior to aluminum,” we were told.

◾️Despite claims that battery packs would be manufactured in-house, we were told that the equipment is months away from arriving, let alone being put into a production environment. In the meantime, we were told that battery packs are being put together by hand.

In a statement, Lordstown Motors said “We will be sharing a full and thorough statement in the coming days, and when we do, we will absolutely be refuting the Hindenburg Research report.”

Read the report:

Hindenburg Research report

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