In case you missed it, embattled electric-truck start-up Lordstown Motors (RIDE -1.16%) said on Aug. 11 that it lost $108 million in the second quarter and that it had $366 million in cash remaining as of the end of June. 

But those numbers may have been the least interesting news in its earnings report. 

Lordstown has been reeling since the abrupt departure of its CEO and chief financial officer in June, following an investigation into allegations that they greatly exaggerated customer interest in the company's upcoming electric pickup truck. Now it appears that the people they left behind are scrambling to figure out how to turn what remains of Lordstown into a viable business. 

Here are three things I took away from the company's earnings report that have me thinking their chances of success aren't good -- and that electric-vehicle investors looking for a bargain might be wise to pass on Lordstown's beaten-up shares.

A prototype Lordstown Endurance, an electric pickup truck designed for commercial fleets.

It now looks likely that Lordstown's electric Endurance pickup will be beaten to market by the (cheaper) Ford F-150 Lightning. Image source: Lordstown Motors.

Lordstown's truck is still a long way from real production

"We are launching the Endurance with a prudent ramp of production given a challenging industry and supply chain landscape," said Executive Chairwoman Angela Strand. "We are on track to begin limited production at the end of September and through the fourth quarter and complete vehicle validation and regulatory approvals in December and January."

Lordstown has been saying for months that production of the Endurance will start in September. But "start of production" is a term of art in the auto industry, one that implies the start of production of vehicles that can be sold to customers. 

As Strand went on to explain, this is not that. 

"This will be followed by deployments with selected early customers in Q1 in advance of commercial deliveries in early Q2," she said, "with the ramp steepening the second half of next year."

In other words, the first trucks that are actually for sale won't be delivered until the second quarter of 2022. What happens between now and then is properly termed "pre-production," testing the assembly line and providing early trucks to potential fleet customers to evaluate, which is what Lordstown was supposed to have been doing over the past several months. 

The takeaway: The Endurance is not on schedule. Given that part of the bull case for Lordstown was that the company would beat the big automakers to market, and given that Ford Motor Company (F 4.16%) will have its less expensive and better equipped electric F-150 Lightning shipping by the second quarter and aimed squarely at Lordstown's hoped-for commercial fleet customers, that's a big problem for Lordstown.

Lordstown is scrambling to come up with a Plan B

One could argue that the good news is that Strand and Lordstown's remaining executive team understand the problem: Demand for the Endurance isn't likely to be, shall we say, robust. Remember, Lordstown admitted in a regulatory filing in June that it had "no binding purchase orders or commitments from customers" for the Endurance. None. 

The not-so-good news is that there's no Plan B in place yet. But one option, which the company is exploring, is to try to convince others to rent part of the company's factory, a sprawling facility that was once a big General Motors (GM 2.25%) plant. Alternatively, Strand said that the company could build other automakers' electric vehicles under contract.

"We have seen the multiple opportunities that our manufacturing facilities in our large surrounding campus present to other companies that are seeking ready-to-go manufacturing capabilities for their products," Strand said. "This is a significant market."

Strand said that Lordstown is only using about 30% of the facility, and that it has held "serious discussions" with "several" unnamed potential partners about renting or leasing unused sections of the factory, and about building vehicles under contract.

"This is a critical strategic pivot for us, a decision that we believe will lead to significant new revenue opportunities for Lordstown," Strand said.

I'd call it more of a Hail Mary. While I think it's possible that the state of Ohio might be willing to offer incentives to anyone wanting to build electric vehicles at the Lordstown plant, I think it's a long shot that any established automaker -- or any well-funded start-up, for that matter -- would be willing to put its future product in the hands of a company with Lordstown's dubious track record to date. 

Investors aren't breaking down the door to give Lordstown more money

We know that Lordstown needs more money. The company warned, probably at the insistence of its auditors, in a regulatory filing in June that it might not have enough cash to stay in business for another year. That warning, a so-called "going concern" notice from the auditors, was -- or at least should have been -- a wake-up call to auto investors. 

Lordstown still has some cash, about $366 million as of June 30. But it doesn't look like deep-pocketed investors are beating a path to the company's door. Lordstown did say last month that Yorkville Advisors, a company that specializes in distressed start-ups, has agreed to buy up to $400 million in Lordstown stock over the next few years at below-market prices. 

On one hand, it saves Lordstown the trouble of trying to do a proper secondary offering. On the other, Yorktown isn't doing this because it plans to build a stake in Lordstown. It's just planning to quickly resell the stock at market price, locking in a gain. 

It's the kind of deal you make when you don't have other options. But Strand tried her best to suggest otherwise, without actually saying so.

"The agreement [with Yorktown] was the first of what we believe will be several steps to ensure that the company has the financing it needs to succeed in profitability," she said. "We are now exploring a variety of other financing options, including non-dilutive private strategic investments and debt."

That's almost word for word what a company spokesperson told me last month, which suggests to me that Lordstown hasn't made progress on the funding front. That in turn suggests that if Lordstown can secure funding, it's not likely to be on favorable terms. 

The upshot: This is now a salvage operation

Let's sum up. 

  • Lordstown had hoped to beat Ford to market, but it now won't -- and Ford is the long-established leader in the commercial-vehicle segment that Lordstown hopes to enter. 
  • Lordstown's leaders are hoping that someone with deep pockets will pay the company to do... something.
  • Lordstown is short of cash, with no good funding options visible at present.

My bottom line: This is now a salvage operation, and salvage operations don't deserve growth-company multiples. 

To be clear, I think that Strand and Lordstown's president, Rich Schmidt, are doing their sincere best to clean up the mess that the company's now-departed founder Steve Burns and CFO Julio Rodriguez left behind. And we should note that Lordstown does have some things of value, namely a factory, some tooling, and some cash in the bank. 

It's still possible that there's a business here. But I don't think it's likely to be a big business, and it will almost certainly need additional funding that could be dilutive of current shareholders. That makes me think that Lordstown's stock is likely to fall even further from recent levels. Trade carefully.