Steve Burns sold $59 million worth of stock before the electric-truck maker hit a wall with its debut pickup.
(Bloomberg) — Lordstown Motors began the year with a big setback: An electrical issue was leading its debut model, the Endurance pickup, to lose propulsion while driving, forcing the company to stop production and deliveries. The manufacturer recalled 19 trucks that were with customers or in internal use.
Its woes got worse this week. Chief Executive Officer Ed Hightower warned that while Lordstown Motors has a “clear line of sight” to fixing quality issues and resuming production, ramping up will require finding a larger automaker that’s willing to partner up and help with purchasing and sales. The Endurance simply doesn’t pencil out and is costing the company more to build than it can charge.
Lordstown Motors stock understandably didn’t fare well from this one-two punch, plunging 31% in the last two weeks. The company is learning along with Rivian, Lucid, Nikola and others that it’s much easier to sell investors slide decks modeling out how quickly electric vehicle markets will grow than it is to spool up a supply chain and master manufacturing.
One executive who’s learned this all too well is Steve Burns. The founder of Lordstown Motors resigned as CEO in June 2021 after the electric-truck maker’s board investigated claims by short seller Hindenburg Research and found that the company had indeed made inaccurate statements about Endurance pre-orders.
Since his departure, Burns has sold about $59 million worth of stock, according to regulatory filings. His latest disposal of 5 million shares in January — before the company disclosed the quality issues and difficulties with its production ramp — dropped his holding to less than 21.7 million shares. While he remains Lordstown Motors’s biggest shareholder, he’s cashed in one-third of his stake since he stepped down as CEO.
Burns didn’t return a call seeking comment on his stock sales.
Burns started Lordstown Motors in 2019 after leaving Workhorse Group, another money-losing electric-truck venture. Burns’s vision was to beat Tesla and incumbent automakers to market with an electric pickup built at the assembly plant in Lordstown, Ohio, that General Motors shuttered after more than 50 years. CEO Mary Barra’s decision to close the factory infuriated then-President Donald Trump, who’d promised a manufacturing renaissance to voters in the region.
GM loaned Lordstown Motors $40 million, half of which covered the purchase of the Ohio plant. The rest was aimed at helping Burns get started on the Endurance.
Lordstown Motors then went public in 2020 by merging with a special purpose acquisition company, netting the company about $675 million in proceeds. Its market capitalization briefly exceeded $5 billion around the time EV mania peaked. It’s now worth just over $200 million.
If Lordstown Motors is unable to find a partner, the company plans to pivot by developing other electric models with iPhone maker Foxconn, which acquired the Ohio factory last year.
While the Endurance is now at risk of never being mass-produced, Burns has managed to walk away with millions. Even at Lordstown Motors’s depressed current valuation, he has almost $18.3 million worth of stock left.
–With assistance from Anders Melin.
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