How can a car company remain in business if it only sells six cars? Lordstown Motors has been able to do so, for now.
Lordstown shut down production last month because of quality issues. A car company that cannot sell cars is doomed. (Click here for the 13 biggest electric vehicle business failures in American history.)
In the most recent quarter, the company’s revenues were $194,000. It lost $102 million. For the full year, it lost $208 million. Lordstown said its cash and short-term investments of $221 million were enough to bridge it to a period when revenue would pick up.
Edward Hightower, Lordstown Motors’ CEO and president, tried to explain the company’s plans, “Our asset-light business model and collaboration with the Foxconn EV ecosystem, including MIH, will provide the opportunity for Lordstown Motors to create winning EVs that are tailored to the needs of customers that use them for various work applications, while gaining the cost benefits of scale.” Lordstown does not have time to do any of that.
Lordstown is up against the Ford F-150 Lightning, which has severe problems of its own but is positioned to be the industry leader. The huge-selling Chevy Silverado and Ram will soon have electric versions of their own. So will Tesla.
The industry is not only crowded, but Tesla has started a price war that will tear into margins, both its own and competitors who want to fight for market share. The engine industry will have trouble delivering hefty profits. Lordstown had to have premium pricing. The chance of that is gone. So is Lordstown.
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