SEC: Lordstown Motors misled investors, exaggerated pre-orders and timeline for Endurance truck

LORDSTOWN, Ohio – A state agency says Lordstown Motors it actually misled investors by exaggerating the amount of pre-orders it had for the all-electric Endurance pickup truck, and that it promised to deliver the truck to customers sooner than it could.

The allegations are not new and were first made by investment firm Hindenburg Research in March 2021. This prompted the Securities and Exchange Commission to launch an investigation.

The SEC announced Thursday afternoon that it is charging Lordstown Motors with misleading investors and customers.

Since the investigation began, Lordstown Motors has fired its founding CEO, sued the company that sold its manufacturing plant, filed for Chapter 11 bankruptcy protection, and sold the Endurance truck intellectual property to the company’s founder.

The Plain Dealer and cleveland.com have reached out to Lordstown Motors for comment.

According to the SEC, Lordstown Motors claimed it had more than 100,000 orders for its Endurance truck. But these orders were not mandatory and many orders “came from companies that did not operate a fleet or intended to purchase trucks for their own use.”

The SEC also said Lordstown Motors failed to respond to production delays that continued to push back the launch of the Endurance truck. It wasn’t until November 2022 that the company could begin shipping the trucks, and only 18 were delivered to customers by May 2023.

The original plan was to build and sell the trucks by the end of 2020, but the deadline and number of trucks kept getting pushed back.

Lordstown Motors by defrauding investors “violated certain anti-fraud, proxy and reporting provisions of the federal securities laws,” according to the SEC. The federal agency is responsible for ensuring that publicly traded companies provide accurate information to investors.

“We contend that, in the highly competitive race to deliver the first mass-produced electric pickup truck to the U.S. market, Lordstown delivered on the true needs of the Endurance,” said Mark Cave, associate director of the SEC’s division of enforcement. “Exaggerations that misrepresent a public company’s competitive advantages distort capital markets and undermine the ability of investors to make informed decisions about where to put their money.”

According to the SEC, Lordstown Motors — without acknowledging or denying the SEC’s findings — has agreed to a cease and desist order and to pay $25.5 million, which would be paid to the parties now suing Lordstown Motors. Such payments may be approved by the bankruptcy court.

The The Lordstown plant, formerly owned by General Motors, is now owned by Taiwanese manufacturer Foxconn. In May 2022, Lordstown Motors sold the factory to Foxconn with the idea that Foxconn would hire the existing workers and then build the Endurance as a contract manufacturer.

Lordstown Motors later took legal action against Foxconn. Foxconn is now building “optional driver” tractors for other companies at the factory.

In September, Stephen Burns, founding CEO who had resigned from Lordstown Motors in June 2021, bought most of Lordstown Motor’s assets for $10 million.

Sean McDonnell covers business and consumer topics Cleveland.com. You can reach him at smcdonnell@cleveland.com You can read more Cleveland business stories at cleveland.com/business/.