Electric vehicle launch remains on track

LORDSTOWN – Lordstown Motors Corp. remains on track to launch production of its first vehicle later this year, but is getting there slowly as it faces issues with parts availability, quantity and pedigree in its supply chain.

“With around 1,500 parts in an Endurance, it’s important to complete every build with the right parts pedigree,” Edward Hightower, chairman and chief executive of Lordstown Motors, said. “Completing the construction of a vehicle and then having to retrofit it or add a missing (part) or replace an incorrect part can have a negative impact on quality.”

Hightower said on Thursday after the company released its second-quarter financial results that it was limiting the first batch of the battery-powered pickup truck to around 500. Commercial production will begin later this year, but with a slow ramp-up to mitigate concerns. parts-related challenges, he said.

“We expect production to ramp up in the fourth quarter with the majority of the first 500 vehicles built in the first part of 2023,” said Hightower.

Earlier, the company said it plans to make 500 trucks by the end of 2022 and another 2,500 in 2023.

Lordstown Motors also continues to grapple with the cost of producing the van which exceeds its selling price, but Hightower said there are plans to cut costs by spending hard tools, expanding scale with suppliers and d other value-oriented methods.

“However, we have delayed larger investments in hard tooling and the like in order to manage our balance sheet and limit the amount of new capital needed to meet our initial production targets,” said Hightower.

Still, the company posted its first-ever quarterly profit, thanks to the sale of its car manufacturing plant to electronics and technology giant Foxconn.

The company reported operating profit of $61.3 million, which includes a $101.7 million gain from the sale of the Lordstown plant and $18.4 million that Foxconn repaid to Lordstown Motors of certain operating expenses related to the transaction completed in May.

Lordstown Motors ended the three-month period from April to June with $236 million in cash, about $32 million more than at the end of the first quarter, and cut operating expenses to 58, $8 million, compared to $88 million in the quarter.

Adam Kroll, chief financial officer, said the focus going forward is on prudent cash management. The company’s second-half operating loss and capital expenditures are expected to be between $140 million and $150 million.

“As we scale our production schedule and exercise disciplined cost management, our capital requirements this year will decrease significantly from the $150 million we previously indicated,” Kroll said. “I expect our cash requirements for the remainder of 2022 to be closer to $50 (million) to $75 million.

“However, in order for us to execute our plan to deliver 500 units of the Endurance, we will need to raise significantly more capital to cover operating costs,” Kroll said.

The factory purchase agreement was for $230 million, and Foxconn repaid Lordstown Motors approximately $57.5 million. The deal also called for Foxconn to be the contract manufacturer of the Endurance and a joint venture agreement to co-develop future electric vehicles and commit $100 million to the new company.

Hightower, also CEO of the joint venture, MIH EV Design LLC, said the first vehicle program under the new company could be announced in the coming months.

Lordstown Motors executive chairman Daniel Ninivaggi said the company was also exploring partnerships with other original equipment manufacturers (OEMs) “to jointly evolve the Endurance.

“As one of the very few full-size all-electric pickup trucks that will be on the market, the Endurance offers other OEMs the opportunity to enter the market quickly and at relatively low cost since our development work is virtually complete. completed”, he said.

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