Transportation and electric start-ups did not expect their stocks to fall below the dollar. More than a psychological blow, this poor performance could lead to delisting from the Nasdaq Stock Exchange, where most of them trade. The thinking abounds that if a stock is held in such low regard, why does it deserve a seat on the stock exchange?
TuSimple is on the clock to avoid such indignity at the end of the month. On Thursday, the company said it would lay off an additional 300 employees in addition to the 350 it left in December. But the independent trucking software maker isn’t the only startup in such a predicament.
Commercial electric van maker Lordstown Motors (30 cents a share), electric and hydrogen truck distributor Nikola (74 cents) and hydrogen fuel cell maker Hyzon Motors (49 cents) are facing existential crises.
Permits stock increase and reverse stock split
While Nikola hopes its shareholders will agree to double its authorized shares at the company’s annual meeting on June 7, Lordstown plans to ask shareholders on Monday to approve its board of directors’ reverse stock split of 1:3 to 1:15. If shares remain below $1, Nasdaq may remove the RIDE ticker from the exchange as soon as next Friday.
A reverse stock split, which is exactly what it sounds like, reduces the number of shares and theoretically raises the price. When autonomous truck software developer Embark Trucks executed a reverse 1:20 split in August, its share price immediately shot up. But nothing has changed financially.
In January, Embark effectively ran out of cash as the price of its booster stock plunged. Embark lay off 70% of its workers. Its future is unclear, but its finances — boosted by a reverse merger with a special purpose acquisition company in 2021 — are in shambles.
End of the Lordstown line?
Lordstown’s primary problem is its product: its commercial pickup truck called the Endurance has quality problems. The fiercely competitive electric vehicle market has left few margins for error.
Lordstown owes its existence – and perhaps its collapse – to the smooth speaking of founder Steve Burns. He had GM sell his old 6.2 million square foot assembly complex in Northeast Ohio to him for $20 million in 2019. GM even took out a mortgage and loaned Lordstown another $20 million to retool the former automaker’s plant.
This was not altruistic. General Motors had no new product to dedicate to the 56-year-old facility. That infuriated then-President Donald Trump, whose strong support in Mahoning Valley helped him win Ohio in the 2016 election. Trump’s tweets created a sense of urgency for GM.
Selling to Burns became the automaker’s solution. An angry United Auto Workers union later that year organized a 40-day strike at General Motors that cost them $3 billion. Reversing the actual Lordstown closure was a union demand.
It was months before Burns found a SPAC sponsor in DiamondPeak Holdings. The 11-week period between the August agreement and the closing in October 2020 was blazing fast even during the height of the SPAC craze when hundreds of startups linked up with blank check companies created specifically to find merger candidates.
Make money as lordstown bleeds
Lordstown received $780 million in SPAC royalties and Burns received a 26% stake in the company. He struck a technology transfer deal with his former company, the Workhorse Group, in exchange for a 10% royalty and royalty payments if Lordstown transferred Workhorse’s orders for an electric truck it had designed but never produced.
As Lordstown lurched from crisis to crisis, including allegations of order fraud for Endurance, Burns and his CFO resigned in June 2021. The SEC and DOJ investigations into these allegations by short seller Hindenburg Research remain open.
Meanwhile, Burns began selling his shares once his lock-up period expired in October 2021. He cashed out $61 million between November 2021 and this month, according to SEC filings. He still owns 7% of the company’s shares.
The Business Journal Daily in Youngstown, Ohio reported May 6 that Burns sold $2.43 million in Lordstown stock between March 8 and May 2, a period when the share price fell below $1.
Meanwhile, Workhorse has divested its stake in Lordstown on the advice of veteran auto supplier CEO Rick Deutch, who became CEO of the electric truck maker in August 2021.
“If you wait until I get there, it may be too late, but I will sell every share you have,” Deutch told me in a recent interview on FreightWavesTV. “We put $106 million on the balance sheet.”
Lordstown and Foxconn are fighting over more than $47 million
Meanwhile, Lordstown is trying to extract $47 million from Taiwan-based electronics maker Foxconn which invested $170 million of an agreed $230 million to buy the plant and become Endurance’s contract manufacturer.
Foxconn alleged in April that Lordstown breached the agreement when its share price fell below $1. Lordstown and Foxconn are at an impasse, according to a May 11 SEC filing.
Lightning eMotors pay out big bucks to access the capital
Electric truck conversion startup Lightning eMotors may get up to $50 million over the next 18 months from YA II PN Ltd. Inc., a Cayman Islands investment firm that has invested money in other electric mobility startups including Xos Inc.
But it won’t come cheap.
YA II PN gets shares of Lightning eMotors at an 8% discount to their trade value and the Loveland, Colorado company can pay up to 15% interest if it defaults on the agreement. YA II PN can also require Lightning eMotors to issue and sell shares of common stock to cover defaults. More details are in this SEC filing.
Volvo Trucks helps first responders see under the skin of an electric truck
The high voltage systems in an electric truck can be a conundrum to the first responder in a crash. What you touch and how you do it can be a matter of life and death.
The Volvo Group is making it easier with an augmented reality security system that allows rescue workers to see under the truck’s skin.
The Emergency Response Guide app is available for free download from the Android and Apple stores. Provides safety information for all brands of heavy-duty electric trucks from the Volvo Group, including Volvo Trucks, Renault Trucks and Mack Trucks, which will be added in June.
“The new AR app is a powerful tool that can support emergency services to quickly and safely secure a location, while reducing the risk of injury to themselves and others,” said Lars Steinqvist, Volvo Group chief technology officer, in a press release.
Briefly note…
Cummins Corporation It officially opens America’s first electrolyzer manufacturing plant on Friday in Fridley, Minnesota. On Monday, it will cut the ribbon for a $452 million investment in its Jamestown Engine Plant in western New York. Jamestown will produce Cummins’ non-fuel based internal combustion engine platform.
Heartland Express Received this week from Kenworth T680 Signature Edition with a 76-inch high ceiling bed. It represented the 750,000th Kenworth Truck built at the company’s Chillicothe, Ohio plant, which opened in 1974.
PackkarThe company’s next-generation Series 8 electric truck will debut DAF truck brand in Europe. Independent Swedish Teleoperations Company I want Signed Letter of Intent to purchase 50 DAF XD electric vans capable of a range of 310 miles between charges. Class 8 first generation Peterbilt The 579EV gets about 150 miles on a single charge.
That’s it for this week. Thanks for reading. Click here to get Truck Tech emailed Friday. And watch Truck Tech on FreightWavesTV at 4pm EST every Wednesday.
Next week’s guest is Thomas Healy, Founder and CEO of Hyliion Holdings. He will give an update on Hyliion’s natural gas-powered HyperTruck ERX that produces electricity and explain the next generation of Karno technology for the ERX that Hyliion has purchased from General Electric.
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