Lordstown Motors says CEO, CFO resign

Lordstown Motors Corp. said on Monday that CEO Steve Burns and CFO Julio Rodriguez have resigned, days after the electric truck maker warned that it had "substantial doubt" about its ability to continue as a going concern in the next year.

Lordstown said its lead independent director, Angela Strand, has been appointed executive chairwoman and would oversee the firm's transition until a permanent CEO is identified.

The company named Becky Roof as interim CFO effective immediately. Roof has previously served as interim finance chief at numerous companies including Eastman Kodak and Hudson's Bay Co.

Shares in Lordstown plunged Monday, closing down nearly 19 percent to $9.26.

Strand, 52, is managing director of an advisory firm specializing in technology and business strategy, and has worked with fleets and fleet management companies, the types of customers Lordstown is aiming to win after production of its Endurance pickup is scheduled to start in September.

She will take part in a media appearance on Tuesday Lordstown had scheduled for Burns and other executives with the Automotive Press Association.

In March, the startup disclosed a Securities and Exchange Commission probe of its operations after short-seller Hindenburg Research said its technology was flawed and that pre-orders for its truck were nonbinding.

In a separate statement on Monday, Lordstown said a board investigation concluded the company had made certain statements about vehicle preorders that did not hold up to scrutiny.

“Lordstown Motors made periodic disclosures regarding preorders which were, in certain respects, inaccurate,” according to the company’s own investigation.

The probe cited instances when the startup inaccurately claimed preorders came from commercial fleets, instead of from third party management companies or “influencers” that did not plan to purchase trucks directly.

It also found that some of the preorders were placed by ostensible buyers unlikely to have the resources to complete the orders or whose commitments were “too vague or infirm to be appropriately included in the total number of preorders disclosed.”

Short seller Hindenburg alleged that Burns had been forced out of his former company, electric-van maker Workhorse Group Inc. He left that company in 2019 and founded Lordstown. Burns denied Hindenburg’s allegations and on Monday declined to comment about his exit in a text message.

The board concluded other allegations made by Hindenburg in March were “false and misleading” in many aspects.

Lordstown is one of a slew of electric-vehicle startups that have gone public through mergers with so-called special purpose acquisition companies, or SPACs, which have been controversial because they’ve made public companies out of young ventures with little in the way of revenue or commercially viable products. It combined with DiamondPeak Holdings in an October deal that netted Lordstown $675 million.

Burns’s abrupt departure and Lordstown’s finding that it made misstatements under his tenure are eerily similar to what transpired at Nikola Corp., another electric-vehicle startup that went public via a blank-check company. Nikola’s founder and CEO also stepped down after Hindenburg targeted the company for misleading investors, something the startup later confirmed.

Lordstown drew attention to itself when it acquired a shuttered General Motors factory in Youngstown, Ohio, where it plans to manufacture its own vehicles. The moved was lauded by President Donald Trump’s administration after he had promised to bring back work to the thousands of workers who lost jobs when the plant was closed in 2019.

Since the going-concern warning last week, Lordstown has said it's in talks with multiple parties to raise funds. The startup also disclosed in a regulatory filing it has hired a unit of AlixPartners, an advisory firm known for helping companies restructure operations.

The exit of its two top executives comes at a difficult time for the company as it attempts to transition from research and development into commercial production of its first model.

“We remain committed to delivering on our production and commercialization objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders,” Strand said in the statement.

Reuters and Bloomberg contributed to this report.