Lordstown Motors, which is currently undergoing Chapter 11 bankruptcy, is also facing charges from the Securities and Exchange Commission (SEC) for allegedly misleading investors about the sales potential of its Endurance electric pickup truck.
As part of a settlement, Lordstown will pay $25.5 million, allocated to resolve ongoing class action lawsuits. The SEC contends that Lordstown overstated the demand for the Endurance in a competitive race to introduce the first mass-produced electric pickup truck in the U.S., distorting the capital markets and impeding investors’ ability to make informed decisions.
The investigation which began back in 2021, is still ongoing, and Lordstown Motors’ founder, Steve Burns, who recently acquired the majority of Endurance assets for a new startup called LandX, is not specifically charged in the SEC’s order. While denying any wrongdoing, Burns expressed disagreement with the SEC’s characterization of his actions.
According to the SEC, Lordstown and Burns provided misleading information about the number of preorders for the Endurance and falsely claimed access to all necessary truck components. The commission alleges that Lordstown misrepresented the nature of pre-orders, the availability of key parts, and the timeline for delivering the trucks. Lordstown’s sales team reportedly treated nonbinding letters of intent from potential fleet customers as pre-orders, presenting an inflated order book to appear legitimate.
The SEC asserts that between 40% and 71% of the pre-orders were misleading, and Lordstown’s statements about having access to GM parts were deceptive. The SEC claims that Lordstown had to source parts from other suppliers, incurring an additional $150 million in costs. The company continued promoting a September 2021 ship date despite knowing internally that it couldn’t meet that deadline.
