Lordstown Motors continues to stumble. The beleaguered electric vehicle startup is now being investigated by the Department of Justice, in addition to an ongoing investigation by the Securities and Exchange Commission.
The investigation, first broke by the Wall Street Journal on Friday, is still in its early stages, according to unnamed sources. It is being conducted by the U.S. attorney’s office in Manhattan.
The probe is just the latest series of woes for the startup, which recently said it had to cut production volumes for its debut electric pickup, Endurance, by half – from around 2,200 vehicles to 1,000. Just a few weeks after it made that announcement, there followed news of a corporate shakeup: the resignation of founding CEO Steve Burns and CFO Julio Rodriguez. Burns started the company as an offshoot of his previous startup, Workhorse Group.
Lordstown had a strong start, with investments from General Motors that helped it purchase a 6.2 million square-foot factory from the leading automaker in late 2019. Lordstown made positive headlines last August, when it announced it would go public via a merger with a special purpose acquisition company (SPAC). The deal injected the EV startup with around $675 million in gross proceeds and skyrocketed its market value to $1.6 billion. Less than a year later, Lordstown informed the SEC that it does not have sufficient capital to manufacture Endurance.
Then, in March, the short-seller firm Hindenburg Research released a report disputing the company’s claims that it had booked 100,000 pre-orders for the electric pickup. It wrote that “extensive research reveals that the company’s orders appear largely fictitious and used as a prop to raise capital and confer legitimacy.” The SEC opened its investigation in the wake of these accusations.
The WSJ story is unclear on the scope of the inquiry and Lordstown Motors did not respond to a request for comment by press time. Stock Market Pioneer will update the story if it responds.