RIDE - Lordstown CEO signals need for new partner to avoid production pauses

2023-03-06 12:40:23 ET

Lordstown Motors ( NASDAQ: RIDE ) shares slumped on Monday after the company missed Q4 earnings and signaled the need for further support from partners.

The EV startup outlined production issues that hampered quarterly performance and persisted into early 2023 during a call with analysts. Quality issues necessitated a production pause that is slated to persist at least through the month of March as management waits to make an announcement on a restart. Additionally, the company said it has lost money on every vehicle delivered thus far.

“The BoM cost of the Endurance is significantly higher than its selling price, materially higher than its selling price,” CEO Edward Hightower said. “It is an upside down margin on each one.”

While he added that the company knows how to bring down costs and “a significant investment to implement the hard tooling for those projects” is expected. The stumbling start to deliveries and uneconomic sticker prices led to a big miss on Q4 expectations for the reported quarter and cautious guidance moving forward.

During the earnings presentation Hightower also said that the company will require additional partners beyond Foxconn to avoid further production hiccups.

“While we continue to pursue partnership opportunities, should we not identify a partner in the coming months, we may decide to pause commercial production of the Endurance until a partner is identified,” he warned. “While our business model is more durable and operational execution has improved, we will continue to execute a capital-constrained business plan, making trade-offs on what and when we spend the funds we have.”

He explained that even if a new partner is identified, “substantial additional capital” will be required to scale Endurance production.

“Significantly, more capital will need to be raised to reach certification, homologation and commercial sales,” Hightower added. “In addition, our litigation contingencies could be material.”

Shares of the Ohio-based EV startup slid 5.36% in afternoon trading on Monday.

Read the earnings call transcript .

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