Steve Burns, the Former CEO of Lordstown Motors, Settles with SEC over Alleged Misrepresentation of Endurance Pickup Truck Demand
Steve Burns, the founder, chairman, and former CEO of Lordstown Motors, has reached a settlement with the U.S. Securities and Exchange Commission (SEC) regarding allegations that he misled investors about the demand for Lordstown Motors’ all-electric Endurance pickup truck. According to the agreement filed with the U.S. District Court for the District of Columbia, Burns will pay a civil fine of $175,000 and is barred from serving as an officer or director of a public company for two years.
Background: The SEC’s Investigation into Lordstown Motors
The SEC’s investigation into Lordstown Motors began in February 2024 following accusations that the company misrepresented the sales prospects of its Endurance electric pickup truck. Lordstown Motors agreed to pay $25.5 million to settle these charges. This settlement came in the wake of Lordstown Motors’ turbulent journey in the electric vehicle (EV) industry after it went public through a merger with DiamondPeak Holdings Corp.
Lordstown Motors’ Foundation and Subsequent Challenges
Founded in April 2019, Lordstown Motors was a spinoff from Burns’ previous venture, Workhorse Group. The company attracted substantial investment totaling $780 million when it went public through the merger with DiamondPeak Holdings Corp., which valued Lordstown Motors at $1.6 billion. As one of several EV startups that went public via mergers with blank-check companies in 2020, Lordstown Motors experienced a surge in share prices.
However, the optimism was short-lived as the company faced challenges in scaling production and fulfilling sales expectations for its electric vehicles. Despite securing investments and partnerships, including support from General Motors (GM) and acquiring a large assembly plant in Lordstown, Ohio, from GM, Lordstown Motors encountered setbacks in meeting its targets.
Controversies and Challenges in the EV Industry
One pivotal moment for Lordstown Motors occurred in June 2020 when it unveiled its Endurance electric pickup truck with considerable fanfare, including an event attended by former Vice President Mike Pence. Burns announced an impressive number of pre-orders for the vehicle, claiming 20,000 orders. However, subsequent investigations revealed discrepancies in these claims. Short seller research firm Hindenburg Research disputed the actual demand for the vehicle.
By June 2021, Burns and other executives had resigned from Lordstown Motors amid mounting scrutiny and regulatory investigations. The SEC’s investigation discovered that Lordstown Motors and Burns had made misleading statements regarding the demand for the Endurance truck, particularly overstating pre-orders from commercial fleet customers. This misrepresentation created confusion among investors and ultimately contributed to the challenges Lordstown Motors faced moving forward.
The Consequences of Misrepresentation in the EV Industry
Following these revelations, Lordstown Motors faced ongoing challenges and eventually filed for Chapter 11 bankruptcy protection. Despite the bankruptcy, the company emerged with a new name, Nu Ride Inc., and a renewed focus on pursuing legal action against Foxconn for allegedly harming its business. This settlement serves as a reminder of the regulatory scrutiny and consequences faced by companies and executives in the dynamic and competitive EV industry.
