Lordstown Motors Corporation is currently undergoing a probe by the U.S. Justice Department, Automotive News reports. According to one person close to the situation, it all has to do with Lordstown’s exaggerated potential sales figures regarding its electric Endurance pickup truck.
Right now, it isn’t totally clear what’s being investigated, though it is coming down to the Securities and Exchange Commission and the US Attorney’s office in the Southern District of New York, which usually focuses on financial crimes and allegations of fraud.
Based on further reporting, Auto News is able to extrapolate that it likely has something to do with the overstated interest in the Endurance truck. Its founder and Chief Executive Officer Steve Burns claimed that the company had received 100,000 preorders for the truck, which is quite a hefty number. It’s possible that this is the subject of the investigation, since this could have resulted in a stock price jump that would have benefited the company.
Here’s a little more from Auto News:
The company is one of a slew of EV startups that have gone public through mergers with special purpose acquisition companies. The so-called reverse mergers have sparked criticism because they’ve made public companies out of young ventures with little in the way of revenue or commercially viable products.
Burns was removed from his position as CEO after his comments, but that doesn’t totally revoke what he said or the impact it could have had. That said, we’ll have to wait for more official details.
EV startup Lordstown purchased a former General Motors factory, which received plenty of fanfare from then-President Donald Trump. The thinking here was that, by using a factory already equipped with production materials, Lordstown would have a leg up on the competition.
That hasn’t happened. Instead, funding has been tight, and Lordstown has appeared to be teetering on the brink of extinction for months.