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Lordstown Motors Faces Skepticism From Investors


Suddenly, startup electric car companies are everywhere. All are hoping to be the next Tesla. And they've created lots of excitement, lots of hype and now some skepticism. Some investors are asking, where's the line between hype and deception? NPR's Camila Domonoske takes a look.

CAMILA DOMONOSKE, BYLINE: The General Motors plant in Lordstown, Ohio, was the economic engine for the community. When GM shut the plant down a few years ago, it was devastating. Then a company with plans to make an electric pickup truck bought the plant and promised a revival. It named itself Lordstown Motors and vowed to bring the first electric pickup to market built in that old plant.


STEVE BURNS: Lordstown, Ohio, is got a long history of vehicle making. The people here are enduring.

DOMONOSKE: So CEO Steve Burns called the planned pickup the Endurance. Climate change concerns have powered a lot of investment in electric vehicles, and the Lordstown story captivated many. We covered it on NPR. Former President Donald Trump was on board.


DONALD TRUMP: Well, ladies and gentlemen, this is incredible.

DOMONOSKE: Now, a prominent short seller claims the story is literally incredible, as in not real. Short sellers are investors who place a bet that a company's stock price will fall. They make money if shares go down. Hindenburg Research has bet against Lordstown and recently published a report calling Lordstown Motors a mirage. The short seller challenged the number of preorders, called out production delays and even published a 911 one call about a test vehicle that caught on fire.



UNIDENTIFIED PERSON: Yes, we were driving and our car's on fire.



UNIDENTIFIED DISPATCHER: OK, sir, what kind of vehicle is it?

UNIDENTIFIED PERSON: Lordstown Motors electric vehicle.

DOMONOSKE: The short seller pointed out that the company has no finished product and no revenue and accused it of misleading investors about how quickly it can change that. Stock prices plummeted after the report and at least one lawsuit has been filed. Lordstown's official response is no comment except to confirm that the report has triggered an SEC inquiry and a board review. Unofficially, though, CEO Steve Burns was asked about it last week and local news station WKBN posted his response online.


BURNS: I quoted Taylor Swift to somebody the other day - haters are going to hate, hate, hate, hate.


BURNS: You got to shake it off.

DOMONOSKE: On an earnings call a few days later, Burns avoided pop songs, but he said the truck is coming and the customers are there. Some short seller attacks can be shaken off; others can take a company down. But short sellers with a financial incentive to tank a company's stock are not the only source of skepticism. After all, as the Lordstown CEO will readily tell you...


BURNS: We're still pre-revenue. We're presales, right? We do not have a product yet.

DOMONOSKE: This is not just a Lordstown problem. There are a ton of startups out there with plans to produce zero emissions vehicles. But for now, they've got no vehicle and zero revenue. You don't have to think there's fraud going on to wonder if these companies merit their sky-high valuations or if they're overhyped. Jaime Perez is a stock analyst with RF Lafferty and he's tracking Lordstown. He's not bothered by the short seller report, but he does have questions.

JAIME PEREZ: It's now coming to the point where you're telling us what you're going to do. We want to start seeing what you're doing. So we want to see a prototype out there.

DOMONOSKE: Call it the dude, where is my car dilemma. It's shadowing a lot of buzzy startups, not just Lordstown.

PEREZ: Until we actually see a car on wheels and driving around, investors and analysts won't be convinced.

DOMONOSKE: At some point, the rubber has to meet the road. Lordstown is promising an early production vehicle in a few weeks. Camila Domonoske, NPR News. Transcript provided by NPR, Copyright NPR.

Corrected: March 25, 2021 at 12:00 AM EDT
The audio, and a previous version of the digital story, stated the Hindenburg Research report triggered inquiries from the Securities and Exchange Commission; in fact, those inquiry began before the report was publicly issued.
Camila Flamiano Domonoske covers cars, energy and the future of mobility for NPR's Business Desk.