LORDSTOWN — Electric-truck startup Lordstown Motors Corp. sharply lowered its production expectation for this year after experiencing higher-than-expected costs.

On Monday, it announced 2021 production “would be at best” half of prior expectations without an additional capital raise to execute its business plan after revising operating expenses for the year upward of $115 million.

Lordstown Motors had projected 2021 production at 2,200 vehicles. It now projects about 1,000 units if funding isn’t secured. The company expects to launch the truck in September.

“First and foremost, we just want to be clear and maybe we weren’t super clear. We are saying, look if we don’t get any funding, which is not in our thought process, but if we don’t, it’s always good to know worst-case, we might only make half of what we were going to make before,” CEO and founder Steve Burns said during the company’s first quarter earnings call. “First-mover advantage has proven to be very, very important in new technology like this. We intend to bring capital in in one or more of the various ways … We fully intend to capitalize ourselves as such we can make our milestones.”

The higher spending, according to the company, is the result of finishing its beta prototype program, conducting vehicle validation tests, securing production parts and equipment, and using third-party engineering resources.

Shares of the company’s stock fell nearly 10 percent in after-hours trading after the production and capital revelations.

The company expects 2021 capital expenditures of $250 million to $275 million and operating expenses of $55 million to $60 million in selling and administrative, and $280 million to $290 million for research and development.

Also, it expects at year’s end to have cash and cash-equivalent liquidity of $50 million to $75 million. That’s down from at least $200 million in March when Lordstown Motors released its 2020 year-end financials.

It ended the quarter with a net operating loss of $125 million. For the year, it’s forecasting a net loss of $360 million to $380 million.

Part of the funding solution could include a loan from a U.S. Department of Energy program that helps the automotive sector develop more efficient vehicles. The request, according to the company’s 2020 year-end report in March from the Advanced Technology Vehicle Manufacturing program, would be for at least $250 million.

Also, “we are currently in discussion for an asset-back financing opportunity that is at the preliminary,” Burns said, but he stopped short later answering a question whether the company would put up its factory as collateral.

Julio Rodriguez, chief financial officer, said the company has $1 billion in assets, “but we want to do capital financing of the next capital expenditures we are going into.”

The company finds itself defending against seven lawsuits filed after a scathing short-sellers report in mid March that characterized Lordstown Motors as a mirage with no sellable product.

The report claims the company misled investors regarding its production capability and preorders, that the more than 100,000 it touted for the truck are “largely fictitious” and “used as a prop” to raise operating capital and confer legitimacy.

It is also the center of a probe by the U.S. Securities and Exchange Commission that began in February.

Burns said a special committee of the board of directors was formed to address the short-sellers report is expected to report on the results of the review by the end of the second quarter. The company also has been complying with the SEC.

It was January when the company announced it had reached 100,000 non-binding reservations for the truck.

“I think we articulated it was a nice round number, but now that the betas are out, we stopped at the 100,000, and we are converting folks over to what we call now vehicle purchase agreements … although they still can be order orders because we don’t have the vehicle done and through regulatory yet, you’re not allowed to take orders, but they have a lot stickier things. Some of them have down payments in them,” Burns said. “When we got to start spending the money to make the vehicles, we’re demanding payments, things like that, so a lot more teeth than the old days.”

He put out a number of 30,000 preorders; all the new ones of which have a down payment requirement. It is required 90 days from building, which “takes the onus off of us to buy those parts ahead of time,” Burns said.

rselak@tribtoday.com