Lordstown Motors Corp.
confirmed the Justice Department is probing its business, investigating matters related to its reverse merger deal last year and preorders for its forthcoming pickup truck, the Endurance.
In a regulatory filing Thursday, the company said it had been informed by the U.S. attorney’s office in Manhattan of its investigation, which follows one initiated by the U.S. Securities and Exchange Commission.
The federal probe adds to the challenges facing the Ohio-based startup as it works to launch its first model, an all-electric pickup called the Endurance that executives have said will begin limited production in September.
The truck is critical to the company’s survival as its cash burn accelerates and it confronts higher-than-expected costs on everything from parts and equipment to having to expedite shipping of some components.
Lordstown Motors, which took over a former General Motors Co. factory in 2019 to build battery-powered trucks, is one of several new electric-vehicle startups that have captured the attention and backing of investors in the past year. Many of those upstart firms are now moving closer to putting out their first electric models, although some have confronted delays and other execution problems.
On Friday, Rivian Automotive, which is also making an electric pickup, notified buyers that deliveries of its debut model, the R1T truck, would be delayed until September.
The delay was due in part to complications related to the pandemic, Rivian Chief Executive Officer RJ Scaringe said in an email to customers. The health crisis, Mr. Scaringe said, is having a compounding effect that is disrupting everything from equipment installation to securing vehicle parts, especially semiconductors.
Lordstown Motors is also confronting numerous obstacles and in recent months has been marred by bad news. It has said it has received two subpoenas from the SEC requesting documents and information related to its merger deal in October with publicly traded DiamondPeak Holdings Corp., a special-purpose acquisition company.
The SEC also is seeking information related to the company’s preorder book for its all-electric pickup truck. Those preorders had been promoted by executives and the manufacturer as a sign of future demand for the Endurance.
The Wall Street Journal first reported the Justice Department’s inquiry earlier this month.
A Lordstown Motors spokesman said earlier this month the company is committed to cooperating with any investigations and inquiries and looks forward to focusing on production with its new leadership team.
A spokesman for the Justice Department declined to comment.
Lordstown Motors shares closed Friday down 4%, finishing the week at $8.54 a share.
In a June regulatory filing, Lordstown Motors disclosed a going-concern notice, warning it might not survive the next 12 months without an additional infusion of capital.
The company’s statements about its truck preorders have also come under scrutiny recently, following a report by short seller Hindenburg Research that raised questions about their legitimacy and other aspects of its business, including whether the Endurance would start production in September.
A Lordstown Motors board committee that was formed to look into short sellers’ claims confirmed that some of the company’s statements on its truck preorders were inaccurate, while saying the Hindenburg report was false and misleading in other respects.
Around the same time of the committee report’s release, Lordstown Motors’ founder and CEO,
left the company, along with several other top executives.
Lead independent director
has taken over as executive chair, as the startup searches for a new chief executive. It has also engaged turnaround specialist AP Services LLC, a subsidiary of AlixPartners LLP, whose managing director
has stepped in as Lordstown’s interim chief financial officer.
Write to Ben Foldy at Ben.Foldy@wsj.com
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