LORDSTOWN — An investment research firm known for short-selling stocks issued a scathing report on Lordstown Motors Corp., claiming the upstart electric-vehicle company has no sellable product and has misled its investors.

Shares of Lordstown Motors stock dropped 16.5 percent Friday to close at $14.78 per share after New York City-based Hindenburg Research the same day released the report characterizing the company as a mirage.

Lordstown Motors is operating out of the former General Motors assembly plant in Lordstown. It bought the plant with GM’s help to produce an electric truck, the Endurance, for use by fleets after GM idled the facility in March 2019.

The company is in the testing phase and plans to launch production in September to start to fulfill the more than 100,000 non-binding reservations the company says it has for the truck, which has a sticker price of $45,000 after a federal rebate.

Hindenburg’s report claims the orders are “largely fictitious” and “used as a prop” to raise operating capital and confer legitimacy on the company, based on conversations the firm had with ex-employees, business partners and a review of documents.

The report also cites what it calls fake orders.

In an emailed statement Friday evening, Lordstown Motors stated, “We will be sharing a full and thorough statement in the coming days, and when we do, we will absolutely be refuting the Hindenburg Research report.”

A leader at another company and of a nonprofit in the report also spoke out against the report.

The report alleges Lordstown Motors’ book of orders appears to be “almost entirely fake” and / nonbinding, which represents “no genuine demand” for the truck. It also claims Lordstown Motors at times paid for the nonbinding orders, then used the “fictitious demand to fuel financing rounds and to confer an aura of credibility on the company.”

It also questions a deal for 14,000 trucks from Texas-based E Squared Energy Advisors, claiming the company has two employees, is run out of an apartment and does not operate a vehicle fleet.

Tim Grosse, CEO / executive director of E Squared, said the report was inaccurate and twisted the truth.

“The whole thing is slanted,” he said. “It’s a smear campaign to profit off of a shorted stock. That’s plain and simple what it is.”

He said the company intends to purchase the vehicles under a new “pay as they go” program for E Squared. The company will own the trucks and then contract with fleet operators to use them. It’s akin to a lease program.

“The idea is to have them switch over to EVs without having to come up with a lot of up-front capital and then pay as a service as they go,” he said.

The report also cites Innervations LLC, which the report states placed an order for 1,000 trucks in April, having a Regus Virtual Office and listing its mailing address at a UPS store in Hernando, Fla. According to a company official in the report, Innervations doesn’t plan to purchase, but rather promotes the company and directs it to other companies interested in purchasing trucks.

This newspaper reported then the deal was to broker 1,000 more of the trucks to clients to convert fleets to electric vehicles.

It also details what it calls “just a promoter” agreement with Clean Fuels Ohio, which in March 2020 agreed to partner with Lordstown Motors to help drive the purchase of 500 of the battery-powered trucks.

According to this newspaper, the nonprofit agreed “to fulfill this pledge by helping to educate fleets across Ohio and encouraging acquisitions,” according to the company’s announcement.

Sam Spofforth, CEO of Clean Fuels Ohio, said his comments in the report were taken out of context.

“We value Lordstown Motors and what they will bring to the market as we value all of our members,” Spofforth said Friday afternoon.

As reasons he cited a strong leadership team and its targeting the fleet market since the company’s onset.

“That is a great fit for the work we do as an organization, and what we’ve done in partnership with Lordstown (Motors) is to make introductions to a number of fleets and a number of our peer groups around the country,” Spofforth said. “We have seen a great deal of enthusiasm about the Endurance pickup as a result of those introductions.”

“We continue to support them, and we are very excited to see the Endurance roll off the assembly line later this year,” he said.

rselak@tribtoday.com