'They dug themselves a hole of credibility': Ohio officials troubled about Lordstown Motors

One year ago, former Vice President Mike Pence rode in a new electric pickup from Lordstown Motors and proclaimed it was a new day for the Mahoning Valley.

Ohio officials hailed the company as a savior for the region after General Motors shut down its Chevrolet Cruze operation and took thousands of union jobs with it. The promise was a bold one: Lordstown would manufacture trucks that get the electric power equivalent of 75 miles per gallon of gas.

Now, the plant's future is in question as Lordstown faces multiple investigations and allegations that executives mislead investors about vehicle pre-orders. The politicians who cheered the deal want answers — but some contend there were warning signs from the beginning.

"The political pressure was relieved," said Bernie Moreno, a Cleveland car dealer and Republican candidate for U.S. Senate. "I think the politicians who could’ve made a difference…I think they bought into the magical thinking."

How we got here

Shortly after Gov. Mike DeWine and Lt. Gov. Jon Husted won the 2018 election, they got a call that set off alarm bells: GM was planning to shutter its Lordstown operation.

"Welcome to office," Husted said in a recent interview. "We hadn’t even been sworn in yet. Literally from that moment, we were working to save the facility."

In hindsight, the writing was on the wall. GM had ended second and third shifts at the plant before announcing in November 2018 that it would be "unallocated." Company officials said the move was part of a larger effort to focus more on autonomous and electric vehicles after years of declining Cruze sales.

"People were just f*****g pissed because wait a minute, you’re laying us off and starting a new product in Mexico?" said Dave Green, the former president of United Auto Workers Local 1112. 

Uncertainty swirled around Lordstown for months as workers and elected officials implored GM to use the plant for another vehicle. It became a political lightning rod for former President Donald Trump, who railed against CEO Mary Barra for disrupting the economy in an area important to his 2020 reelection bid.

Moreno pitched Barra on a plan aimed at maintaining Cruze production in Lordstown: He would buy the cars from GM for a ride-sharing service that employed professional drivers. Instead, GM decided to sell the plant to Lordstown Motors Corp., which pledged to hire 400 people to make its Endurance pickup truck.

"We’re essentially reinventing electric vehicles," former CEO Steve Burns said at the time. 

One early proponent of Lordstown was investment banker Mike Gibbons, who is also running for the Republican nomination in the Ohio Senate race. According to Forbes, his firm Brown Gibbons Lang & Co. was tasked with raising $450 million from investors to get the company off the ground. And Gibbons painted the deal as an exciting one.

Lordstown Motor Corp. went public last year after merging with DiamondPeak.

"I'm proud of my efforts to bring jobs to the Mahoning Valley," Gibbons said in a statement.

Moreno said he was approached about investing but declined to do so. While he wants to see the company succeed, he said, he had doubts about the technology and thought the numbers were off base. 

"I don’t know what other people saw," he said. "I know that what I saw was extraordinarily unrealistic…Sometimes we will things to happen."

Trouble in Lordstown

After the coronavirus pandemic ground the automotive industry to a halt, Lordstown started off 2021 on rocky footing.  

An Endurance prototype caught fire in Michigan, and another only made it 40 miles during an off-road race in California, the New York Times reported. But an even bigger gut punch came in March, when Hindenburg Research released a scathing report that accused Burns of overstating how many pre-orders it had received and touting unrealistic production timelines.

"It soon became clear to us that the former CEO was overstating their near-term prospects," Husted said.

Burns resigned in June at the same time Lordstown admitted that some of the disclosures about pre-orders had been "in certain respects, inaccurate," although officials disputed other parts of the Hindenburg report. The Securities and Exchange Commission and Department of Justice are both investigating the company's merger with DiamondPeak and issues over pre-orders.

According to an SEC filing published earlier this month, Lordstown also faces six lawsuits that contend company officials made "materially false and misleading statements" about pre-orders and the production timeline.

The filing said the company is cooperating with the federal probes and maintained that limited production of the Endurance will begin in late September. Lordstown announced Monday that it reached a deal with an investment firm to raise $400 million over four years, which officials say will help kick-start production.

"We always expected we would have many bumps in the road, as even the most successful EV companies have had, but we don’t intend to be deterred from achieving two goals: first, continuing to create good jobs for Lordstown’s workers, and second, designing and manufacturing high-performance, environmentally-friendly full-size electric pick-up trucks," chief operating officer Jane Ritson-Parsons said in a statement.

'I never really felt good'

Meanwhile, Ohio officials who championed Lordstown are waiting to see if the company will fulfill its promise to the Mahoning Valley.

Sen. Sherrod Brown penned a letter to executive chairwoman Angela Strand earlier this month asking her to share a detailed plan about how the company intends to reform its practices in the wake of recent investigations. He also urged Strand to meet with members of the United Auto Workers union and form a "collaborative partnership."

"Your company arrived in the Mahoning Valley with the stated desire to turn this area into 'Voltage Valley,'" Brown wrote. "If you succeed, Northeast Ohio could become a global leader in electric vehicle technology. This is a vision we can all get behind."

In an interview, Brown said he viewed Lordstown with some skepticism from the beginning because many companies have swept into the Mahoning Valley making promises they didn't keep. Still, everyone was excited.

"I never felt really good," Brown said. "I was hopeful. It was my job to find ways to make it work."

Sen. Rob Portman — who worked closely with Brown to get answers about the GM closure — declined to be interviewed for this story, citing the pending DOJ probe. A spokeswoman said he's monitoring the situation closely, and his chief concern remains what's best for workers.

Husted emphasized that Lordstown is not the only development that can help the region transform into "Voltage Valley" but said he hopes it can be part of the equation. However, he said company leaders must first level with the community and clear up the problems that are hindering production.

"They dug themselves a hole of credibility, and it’s not just with us," Husted said. "It’s with the market."

Haley BeMiller is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.