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Why Lordstown Motors' Stock Is Crashing Today

By John Rosevear - May 20, 2021 at 11:34AM

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Ford's new electric F-150 Lightning is going to be a huge problem for Lordstown.

What happened

Shares of electric pickup truck start-up Lordstown Motors (RIDE 6.87%) were trading down sharply on Thursday morning after Ford Motor Company (F 2.21%) unveiled its all-electric F-150 Lightning.

As of 11:00 a.m. EDT, Lordstown's shares were trading about 12.6% below Wednesday's closing price. 

So what

If you're reading this, you probably know that Lordstown is gearing up to start production of its Endurance, a battery-electric pickup truck ostensibly designed around the needs of commercial and government fleet customers. With some backing from General Motors (GM 2.65%), and some promising early interest from fleet buyers, Lordstown looked like it might have a chance of sticking around for a while. 

Until now.

The problem for Lordstown is that the leading automaker in the U.S. commercial-fleet market -- that would be Ford -- just showed the world how it plans to remain the leader of that market, and of the pickup market generally, as the world transitions to zero-emissions vehicles.

Ford's new F-150 Lightning is an impressive product at an impressive starting price -- just under $40,000 before government incentives. Lordstown probably won't be able to match that, at least not profitably, which is why its stock price fell Thursday morning. 

A silver Lordstown Endurance, an electric pickup truck.

The Lordstown Endurance is expected to start at $52,500 before incentives -- over $10,000 more than Ford's F-150 Lightning. Image source: Lordstown Motors.

Now what

This is about more than the F-150 Lightning's starting price. Fleet managers who have been doing business with Ford for years largely know what they'll get with an electric F-150. Even if the total costs of ownership for the Lightning and the Endurance were comparable, it would be very hard for Lordstown (or any other commercial-vehicle newcomer) to convince those fleet managers to take a chance on a new vehicle from an untested start-up rather than going with a similar option from a brand they know. 

Put another way, the investment case for Lordstown, and for most of the other start-ups aiming to produce electric vehicles for commercial-fleet applications, just got a lot harder to make. 

John Rosevear owns shares of Ford and General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Lordstown Motors Corp. Stock Quote
Lordstown Motors Corp.
$2.80 (6.87%) $0.18
Ford Motor Company Stock Quote
Ford Motor Company
$16.18 (2.21%) $0.35
General Motors Company Stock Quote
General Motors Company
$39.48 (2.65%) $1.02

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