Lordstown Clarifies That Car Buy Agreements Aren’t Binding Orders

Lordstown Motors Corp. RIDE -2.23% stated in a securities submitting that though it has struck vehicle-purchase agreements with fleet-management firms, the agreements don’t symbolize binding buy orders.

The clarification on Thursday comes after the troubled electric-truck startup’s president instructed reporters Tuesday the corporate had “fairly binding” preorders and sufficient curiosity from potential patrons to maintain manufacturing facility output by means of the tip of 2022.

Shares had been down about 1% Thursday morning. The corporate’s inventory rose after its president’s feedback and closed Tuesday having gained 11.3%.

The Ohio-based firm stated in its submitting that constructing relationships with specialised trucking and fleet-management firms to include its debut mannequin, the Endurance, into their packages is a vital gross sales and advertising technique.

“They don’t commit the counterparties to buy automobiles, however we imagine that they supply us with a big indicator of demand for the Endurance,” Lordstown Motors stated of the vehicle-purchase agreements.

Lordstown Motors and several other rival electric-vehicle challengers have skilled a reversal of fortune in current months, going from being amongst Wall Avenue’s hottest investments to targets of brief sellers, monetary regulators and critics doubting their futures.

In March, the corporate stated it struck agreements with an affiliate of the dealership group Holman Enterprises to co-market and co-develop enterprise alternatives. The pact additionally features a co-marketing settlement involving Lordstown Motors and Holman’s leasing and fleet-management providers arm, Lordstown Motors stated.

Lordstown Motors stated the vehicle-purchase agreements typically embody a time period of three to 5 years, a designation of Lordstown as the popular provider and down fee phrases, that are often 5% down 90 days earlier than the requested supply date.

Earlier this month, the corporate warned it didn’t have sufficient capital to start out business manufacturing and that there have been doubts it might proceed operations for one more yr. The corporate’s two prime leaders resigned unexpectedly after a brand new report from a board committee discovered inaccuracies in elements of the corporate’s disclosures on truck preorders. On Thursday, Lordstown Motors stated it tapped John Whitcomb, most not too long ago the managing director for international automotive and mobility at Ernst & Younger LLP, as its vp for international business operations.

Mr. Whitcomb, who additionally served as Normal Motors Co. ’s director of worldwide retail and gross sales expertise, will oversee Lordstown Motors’ go-to-market technique forward of the beginning of the manufacturing of Endurance in late September, the corporate stated.

Lucid, Fisker, Rivian and Canoo are among the many well-funded startups racing to launch new electrical automobiles. WSJ requested CEOs and business insiders how new auto firms plan to problem Tesla’s market dominance and tackle legacy automotive makers. Picture composite: George Downs

Write to Dave Sebastian at dave.sebastian@wsj.com

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