Is Lordstown Motors giving up on Endurance electric pickup?
Lordstown Motors (LMC) issued its first recall, covering 19 Endurance commercial electric pickup trucks because they can stop running without warning. It plans a second recall to address issues resulting from its brake part supplier failing to source components to specifications.
“Our team has also worked closely with our supplier network to root-cause the other post-launch quality issues and develop and implement corrective actions, which have included part quality corrections, part design modifications, retrofits and software updates,” CEO Ed Hightower told analysts on a conference call Monday.
The quality issues led Lordstown to stop production Feb. 23. LMC expects to announce in coming weeks when it will resume production. But the long-term future of the Endurance beyond a first batch of 500 trucks appears increasingly in doubt.
LMC Endurance future in doubt without a partner
“While we continue to pursue partnership opportunities, should we not identify a partner in the coming months, we may decide to pause commercial production of the Endurance until a partner is identified,” Hightower said.
LMC is in the process of selling most of its truck-making functions to Foxconn. The Taiwanese company purchased the plant in northeast Ohio in May 2022. Foxconn also became the contract manufacturer for the Endurance, taking on LMC’s production workforce.
Those moves have allowed LMC to have more cash on hand than a year ago but too little to pay for permanent tooling to make the Endurance.
Lordstown booked $194,000 on the sale of three Endurance trucks in Q4. Their production cost was $635,000. But the cost of sales was $30 million, including $8.2 million in depreciation and $21.1 million in net realizable value, which values an asset based on what it would sell for without the costs to sell it.
Bill of material higher than selling price
“The BOM [bill of material] cost of the Endurance is materially higher than our selling price,” Hightower said. “Forming the right partnerships will create the business rationale to invest in the hard tooling and VAVE [value analysis and value engineering] actions required to reduce its BOM cost and scale production of the truck.”
Even as it displays the Endurance at the Work Truck Week event in Indianapolis this week, LMC is shifting its focus to a future product it would design for Foxconn to build.
Foxconn has committed $100 million to the as-yet-unidentified new product. Even with $222 million in cash and equivalents LMC reported as of the end of December, CFO Adam Kroll said it will need to raise more capital to reach certification, get a government-issued certificate that allows a product to enter a market, and begin sales of a new product.
“The next platform and vehicle program are key to Lordstown Motors’ long-term business strategy and are becoming a greater portion of our company’s focus,” Hightower said.
1st recall for LMC Endurance
In a filing with the National Highway Traffic Safety Administration, LMC said all 19 Endurance trucks have a high-voltage cable between the inverter and motor that fail, causing a loss of drive power. The vehicle cannot be restarted once turned off.
LMC had the first report of an inverter failure in January on a vehicle in LMC control. That was followed by several other failures on company-controlled vehicles. One customer vehicle also failed. All occurred after a major snow storm in the Detroit area.
“Vehicle may experience reduction and eventual loss of propulsion without prior warning if the fault occurs. Once the vehicle is stopped, it may automatically shift into neutral. Once the vehicle is shut off, it cannot be restarted. Each of these conditions could result in an increased risk of a crash,” LMC said in its filing.
Dealers and customers were told about the recall on Feb. 22. LMC will replace the cable for free. The NHTSA recall number is 23V-114.
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