The chief executive and chief financial officer of electric vehicle start-up Lordstown Motors have resigned less than a week after the company said it risked failing because of a lack of funds.
Outgoing chief executive Steve Burns will be replaced by independent director Angela Strand, who will lead the company until a permanent replacement is found.
Becky Roof, who has served as an interim CFO for companies including Kodak and Aceto, is set to take over in that role following Julio Rodriguez’s departure.
“All changes are effective immediately,” said Lordstown, which provided no reason for either departure. Shares in the Ohio-based company fell 19 per cent to $9.22 by mid-morning in New York trade.
Strand, described by Lordstown as an expert in the commercial electric vehicle sector, said the company remained “committed to delivering on our production and commercialisation objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders”.
The company last week amended its annual report with the Securities and Exchange Commission to say that in one year it may no longer function as “a going concern”.
Lordstown was in March accused by short-seller Hindenburg Research of inflating orders, exaggerating the viability of the technology used in one of its planned electric pick-up trucks and overpromising on when production of the vehicle might begin.
In a separate statement on Monday, members of Lordstown’s special committee, comprised of three independent directors, concluded that the “Hindenburg Report is, in significant respects, false and misleading”.
“[The report’s] challenges to the viability of Lordstown Motors’ technology and timeline to start of production are not accurate,” the company said.
However, the committee acknowledged that the group had overstated “pre-order” demand for its vehicles. The SEC has been looking into the number of pre-orders since the spring.
“One entity that provided a large number of pre-orders does not appear to have the resources to complete large purchases of trucks,” it said, while others “provided commitments that appear too vague or infirm to be appropriately included in the total number of pre-orders disclosed”.
Many pre-orders were obtained from “so-called ‘influencers’ . . . that committed to attempt to secure pre-orders from other entities, but did not intend to purchase Endurance trucks directly”, it added.
The Endurance, which Lordstown’s website says “helps you get out of any sticky, muddy or slippery situation”, is meant to go on sale this year, but the company said last week that it lacked sufficient capital to begin manufacturing the truck.
Adam Jonas at Morgan Stanley said: “Management change is an important first step for the company to move forward.
“We felt it was untenable for the company to secure necessary new capital with a management team widely seen as potentially not leading the company into the next era of its development.”
Dan Ives at Wedbush said: “It puts gasoline on the fire and [Wall Street] is clearly worried at this evolving situation. Steve Burns departing is a gut punch to the story.”
Additional reporting by Claire Bushey in Chicago