Steve Burns, the CEO of General Motors-backed startup Lordstown Motors, has resigned following an investigation into allegations that he and other executives lied about preorders for the companys electric pickup truck. The startups chief financial officer Julio Rodriguez has also resigned.
The investigation found that while Lordstown Motors said on multiple occasions that a majority of the 100,000 non-binding preorders it collected were from commercial fleets, this was not the case. It also discovered that one entity that provided a large number of pre-orders does not appear to have the resources to complete large purchases of trucks, and that other companies on the list provided commitments that appear too vague or infirm to be appropriately included in the total number of pre-orders disclosed.
We thank Steve Burns for his passion and commitment to the company, the startup said in a statement. Burns will be temporarily replaced by Angela Strand, who is an independent board member at Lordstown Motors, though she formerly worked at Burns previous EV startup, Workhorse. Becky Roof, a certified public accountant and former CFO, will temporarily replace Rodriguez. We have complete confidence in Angela and Becky, and our expanded leadership team, to effectively guide the company during this interim period, the company said.
The probe, which was conducted by law firm Sullivan and Cromwell, was launched in March after short-selling firm Hindenburg Research published a report that made a number of allegations of potential wrongdoing at Lordstown Motors. At the heart of the report was Hindenburgs belief that the EV startup had misled investors about the viability of preorders it touted in late 2020 and early 2021.
The research firm made other claims about Lordstown Motors progress on its electric pickup truck, and also discovered that one of the startups prototypes had caught fire. The law firm says that these other parts of the report are in significant respects, false and misleading, and that the viability of Lordstown Motors technology and timeline to start of production are not accurate.
Lordstown Motors is also facing an investigation by the Securities and Exchange Commission that was opened following Hindenburgs report.
Founded in 2019 by Burns, Lordstown Motors bought a recently shuttered GM plant in Lordstown, Ohio in a deal that then-President Donald Trump billed as GREAT NEWS for the state. Trump had been putting pressure on GM to do something with the factory, and his administration celebrated the transaction and Lordstown Motors as a result. Lordstown Motors brought the truck to the White House for an event in September 2020, and then-VP Mike Pence attended the reveal of the Endurance pickup truck a few months earlier.
The startup went public late last year and raised $675 million in the process. GM was one of the highest-profile investors and has a seat on the board of the startup. GM was also involved in another EV startup, Nikola, that Hindenburg Research published a report about. That company also juggled its leadership and is currently under investigation from the SEC and the DOJ.