Lordstown Suspends Production, Recalls More Than Half of Trucks Produced

Lordstown Motors Corp. recalled 19 of its Endurance all-electric full-size pickup trucks that are either in use by customers or in use internally by the company. 

Lordstown’s recalling more than half of the vehicles it’s produced due to a potential loss of propulsion.

The voluntary recall was filed with the National Highway Traffic Safety Administration (NHTSA) as an effort to address a specific electrical connection issue that could result in a loss of propulsion while driving. 

Lordstown is working with its supplier network to implement a corrective action the company believes will fix this issue. The recall affects 19 vehicles that are either in the hands of customers or being used internally by LMC. Lordstown trucks waiting for shipment and vehicles in process at the manufacturing plant will not be released until they have been retrofitted with the new parts, once those parts are available. Additionally, the company has ceased production until the problem can be solved. 

“While our experienced team has made significant progress in addressing the underlying component and vehicle sub-system issues affecting the Endurance build schedule, we remain committed to doing the right thing by our customers and to resolve potential issues before resuming production and customer shipments,” said Edward Hightower, Lordstown Motors CEO & president.

As of Jan. 3, Lordstown had produced 31 examples of its trucks, and six of those vehicles had been delivered to customers. The company reported that 15 of the remaining 25 would be used for product demonstrations, marketing, and service training purposes, leaving 10 available for additional customer sales. The company expects a slow rate of production through the first quarter of 2023, based primarily on supply chain constraints. 

A component problem is suspected to be the cause of the problem with the Endurance.

Earnings call scheduled for March 6

With the recall announcement, Lordstown also noted it will release its fiscal year 2022 financial results before the stock market opens Monday, March 6. The company will then host a conference call at 8:30 a.m. EST, and stated that a more detailed update on the status of the recall would be provided during the earnings call.

The recall was first announced Feb. 23, and Lordstown’s stock (NASDAQ: RIDE) dropped precipitously, from $1.23 at the previous day’s close to $1.09 at the open, and hitting a bottom of $1.02 the next day. The stock has since rallied back to a high of $1.10 today, but that’s nowhere near the 52-week high of $3.79 set in March 2022, or the issue’s all-time high of $30.23 set in September of 2020. 

Partnership with Foxconn

Lordstown has been kept afloat largely by investment from Chinese firm Foxconn. In May 2022, Foxconn purchased the Lordstown factory from Lordstown Motors, and now operates the factory on behalf of Lordstown. That transaction represented a $230 million investment in North American production capability for Foxconn, and made the same amount available to Lordstown to prepare the Endurance for production. 

Lordstown’s agreed to a $230 million deal giving Foxconn control of the company’s Ohio plant to build EVs.

As the owner of the Lordstown factory, Foxconn is also in talks with Volkswagen about the potential to build the new line of Scout-branded EVs in the facility. Foxconn has also developed a relationship with Fisker as well as revealing its own line of as yet unbranded EVs. 

Then in November of 2022, Foxconn agreed to purchase $70 million of Lordstown’s Class A common stock, and up to $100 million of a newly created Series A Convertible Preferred Stock, replacing a previous joint venture agreement. Foxconn now holds 100% of Lordstown’s preferred stock issues, and 18.3% of the common stock of the company. That stake buys Foxconn the right to designate two members of the Lordstown board of directors. 

“Over the last year, the LMC and Foxconn teams have worked collaboratively to bring the Endurance into commercial production, despite numerous external challenges,” Hightower stated at the time of investment. 

“The combination of LMC’s experienced vehicle development team, Foxconn’s growing EV ecosystem, the MIH platform, and our asset-light business model will allow us to bring great EVs to market faster and more efficiently.”

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