Electric Pickup Truck Maker Lordstown Motors Taps Former Icahn Executive As CEO
Longtime automotive supplier executive Daniel Ninivaggi will take over as CEO at struggling Lordstown Motors Corp. (NASDAQ: RIDE), where legal, financial, and production woes contribute to the company's repeated declaration that it might not be in business a year from now.
The startup still plans to begin limited production of its Endurance commercial electric pickup next month at a former General Motors plant in the northeast Ohio city from which it took its name. LMC hopes the vehicle can gain a foothold with fleet customers before a less expensive competitor, the Ford F-150 Lightning, arrives in 2022.
"I believe the demand for full-size electric pickup trucks will be strong and the Endurance truck, with its innovative wheel hub motor design, has the opportunity to capture a meaningful share of the market," Ninivaggi said in a press release Thursday.
Ninivaggi, 57, began his automotive career at Lear Corp. (NYSE: LEA), where he rose to executive vice president overseeing corporate development and strategy. He is the former CEO of Icahn Enterprises LP (NASDAQ: IEP), a holding company controlled by activist investor Carl Icahn.
Icahn's automotive and trucking representative
Ninivaggi, who is no longer working with Icahn, focused on Icahn's automotive aftermarket network and parts distribution businesses. As of June 30, Icahn had no stake in LMC as he had with other automotive and transportation companies where Ninivaggi did his bidding.
LMC stock (NASDAQ: RIDE), beaten down by the company's challenges, including Justice Department and Securities and Exchange Commission investigations, traded as much as 37% higher early Thursday. It was up 17.05% at $6.45 shortly before 2 p.m. EDT.
Ninivaggi served in several senior leadership roles at automotive suppliers, including co-chairman and co-CEO of Icahn-controlled Federal Mogul Holdings Co., an auto parts business Icahn sold to Tenneco for $5.4 billion in 2018.
He was a director at Navistar International Corp., the Lisle, Illinois-based truck and bus manufacturer acquired by Volkswagen AG's Traton Group in July. Icahn, who owned about 16.7% of Navistar, helped push up the price Traton paid from its original unsolicited offer of $2.9 billion, or $35 a share, to $3.7 billion, or $44.50 a share.
Puffed up orders deflated senior leadership
Ninivaggi succeeds LMC founder and CEO Steve Burns, who resigned in June, along with Chief Financial Officer Julio Rodriguez, following a board committee finding that they had inflated the number of preorders for Endurance trucks. That allegation was central to a report by short seller Hindenburg Research in March.
Executive Chairwoman Angela Strand had been serving as interim CEO following Burns' departure. She will continue as non-executive chair. Ninivaggi will be paid $750,000 yearly in salary and an annual bonus with a target of 125% of his base pay. He currently chairs Garrett Motion Inc. (NASDAQ: GTX), a Tier 1 supplier of turbochargers and other propulsion products.
Looking for new funding
LMC needs money beyond the $675 million in gross proceeds from its October 2020 business combination with special purpose acquisition company DiamondPeak Holdings Corp., a shell company created to merge with a startup or early-stage growth company. GM (NYSE: GM) essentially gave the assembly complex to Burns and later invested in LMC.
GM plans its own full-size electric pickup in 2024 and coincidentally is building a $2.3 billion battery cell plant with joint venture partner LG Chem in Lordstown near the site of the assembly plant it opened in 1966. LMC is using a fraction of the 6.2 million-square-foot complex and is trying to interest others in using unused portions for contract manufacturing.
Ninivaggi's "capital markets expertise and investment proficiency will be invaluable in navigating the company through its commercial ramp-up, capital allocation, and growth phase," said David Hamamoto, who chaired the LMC board CEO search committee.
LMC in June filed a notice of going concern with the SEC, saying it might not have enough money to start production of Endurance. It reiterated that in a filing in July.
In July, LMC said it had arranged a stock-based line of credit in which a hedge fund that would purchase up to $400 million in LMC stock over three years in exchange for making cash available to the company.
Related articles:
Lordstown Motors: Limited production of electric pickups starting in September
Shift to reverse: Lordstown Motors backtracks (again) on electric pickup orders
Workhorse reviews electric van designs, distances itself from Lordstown Motors
Click for more FreightWaves articles by Alan Adler.
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