The electric vehicle business has become extremely expensive for manufacturers, and the market has become wildly competitive. It includes every major car company in the world, market leader Tesla and several startups, some of which have poor financials. Among these, the one with the most product problems and one of the worst balance sheets is Lordstown Motors Corp. (NASDAQ: RIDE). Its challenges have become so great that its low stock price soon could fall to $0.
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Less than a year ago, Lordstown’s share price was $7.19. It has dropped to $1.68. The company recently said it would begin to sell its long-anticipated Endurance electric pickup. However, it will only have a few available in the fourth quarter. Sales need to be above that to solve the company’s balance sheet problem. The Motley Fool recently pointed out that even after selling a factory, “Lordstown knows that’s not sufficient, though. It said it plans to continue to look at alternatives to raise additional capital and possibly enter into other strategic partnerships.”
In its most recently reported quarter, Lordstown had no revenue and a loss of $108 million. There is no reason to believe these numbers will improve financially.
Lordstown is up against tremendous competition. The most challenging of these is the Ford F-150 Lightning. Ford’s electric pickup is part of the F-150 model line, which has been the top-selling vehicle in America for decades. Ford only needs to convince a modest number of gasoline-powered F-150 owners to move to the Lightning to have sales well into the tens of thousands.
Tesla will soon enter the market with its pickup, dubbed the Cybertruck, which will be available next year. General Motors and Dodge already have announced they will be in the market soon. Along with Ford, they dominate the U.S. pickup market.
Finally, Lordstown’s cash problems will not go away. As the economy enters a recession and the cost of cash soars because of high interest rates, the ability to raise money will become harder for even successful companies. And Lordstown is not on that list.
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