ARE EV PREORDERS A ‘MIRAGE?’

Lordstown Motors in Ohio faces SEC inquiry, reports say

Lordstown Motors, the electric vehicle startup based at General Motors’ former auto plant near Youngstown, Ohio, is reportedly facing scrutiny from the U.S. Securities and Exchange

Commission, and a research firm is labeling Lordstown’s claimed vehicle preorders as largely fictitious in order to “raise capital and confer legitimacy.”

Both Bloomberg and the Wall Street Journal reported the SEC inquiry.

Christopher Carofine, a spokesperson for the SEC, said the agency declined to comment.

A message seeking comment was also sent to Lordstown Motors.

The developments, which coincided with a more than 11% drop in the company’s share price Thursday afternoon, represent continuing bad news for the company pitched as a savior for the hard-hit Mahoning Valley, still reeling from the loss of GM’s Lordstown Assembly Plant, which once employed 5,000 workers.

GM sold the plant to Lordstown Motors in 2019, but GM remains active in the area. The company is partnering with a division of LG Chem on construction of a battery factory nearby.

In January, fire destroyed one of Lordstown’s prototype trucks shortly after it left the company’s Farmington Hills research and development center. The company attributed the fire to human error but provided only a limited explanation in comments to the Free Press for a

story in February.

That story also noted that the company had 100,000 preorders for its Endurance pickup, with production of 3,000 planned for this year, and that it will unveil an electric van in June.

However, Hindenburg Research in a report posted March 12 described Lordstown’s preorders as a “mirage,” saying the company has “no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.”

Hindenburg previously brought similar critical attention to EV startup Nikola

Corp., which at one time had a planned deal for an electric pickup with GM but saw that revamped into something much smaller. The Hindenburg note highlighted Lordstown’s questionable use of preorders, which it said were either fake or non-binding.

“The company has consistently pointed to its book of 100,000 preorders as proof of deep demand for its proposed EV truck. Our conversations with former employees, business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy,” the report said.

Hindenburg acknowledged taking a short position on Lordstown shares, meaning it benefits if share prices drop.

Lordstown Motors enjoyed considerable promotion by the Trump administration last year when Vice President Mike Pence took part in the debut of the Endurance pickup in June. Pence even rode onto a stage at the Lordstown plant.

“The best days in Lordstown and Ohio and America are yet to come,” Pence said then. “Endurance isn’t just the name of the pickup truck, endurance describes the character of the people of the Mahoning Valley.”

The fate of the plant that GM shuttered in the electorally important state of Ohio was of keen interest to former President Donald Trump, and GM was criticized heavily for its decision.