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SEC Investigating VW Due to the “Voltswagen” Stunt

April 30, 2021 admin

The “Voltswagen” April Fool’s Day prank has led to an investigation by the SEC.

What started out as a “humorous” advertising and marketing ploy could land German automaker Volkswagen in serious trouble with the federal government.

The Securities and Exchange Commission (SEC) is apparently looking into VW’s “Voltswagen” marketing stunt to determine if it hurt company stock prices and may have broken any U.S. securities laws, according to German news outlet Der Spiegel.

The incident in question dates back to March 29. As a sort of early April Fool’s Day prank (and marketing ploy), VW “accidentally” released a rough draft of a press release declaring the company was going to change its name to “Voltswagen” as part of a larger effort to promote its ever-growing line-up of electric vehicles (EVs).

This action was picked up by the worldwide automotive press and on March 30 VW issued an official press release to several news outlets, including the Associated Press, confirming the leaked statement from the day before.

This action resulted in VW’s stock price going up. At one point it was 12.5% above its price before the whole incident.

SEC looking at jump in stock price

VW of America President Scott Keogh took responsibility for the poorly received April Fools’ prank that wasn’t on April 1.

This is what caught the attention of the SEC, taking what many considered a fairly unfunny publicity ruse to a possible federal offense.

After the April Fool’s stunt failed in the eyes of the media and the public, VW issued a press statement saying the releases were actually part of a larger tradition in which companies often issue prank statements.

This one just meant to also focus the world’s attention on VW’s growing EV portfolio.

But public statements that affect stock prices usually don’t get an “April Fools” immunity. An SEC investigation could result in charges against the company.

Several news organizations, including The New York Times and Reuters, have asked for a comment from VW. So far, the company has declined to issue one.

Just one of many VW legal scandals

This is not the first time VW has gotten into trouble for the way it conducts its business.

Oh those wacky Germans!! As quickly as it got here, VW took it away: Voltswagen is the company that never was.

In October 2015, as Volkswagen struggled to deal with its diesel emissions scandal, new data raised questions about whether the automaker properly reported death and injury claims to U.S. regulators during the past decade.

A study by the financial advisory firm Stout Risius Ross Inc., found that Volkswagen of America reported nine times fewer deaths and injuries than the average of the 11 largest automakers operating in the U.S. market. Significantly, VW reported less than half as many incidents as either Fiat Chrysler or Honda, both of which have been fined for underreporting their own death and injury data.

Back in September 2015, the EPA accused the German maker of using a so-called “defeat devices,” software designed to fool government emissions tests, on a variety of luxury models from the Audi and Porsche brands. The feds charged VW took steps to cover up excess emissions on 482,000 vehicles sold in the U.S. during a 7-year period.

The end result was VW paying billions of dollars in fines to various governments around the world. The company also faced numerous consumer lawsuits that further cost the company money.

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Fiat Joins Electric Van Fray with New E-Ducato

April 22, 2021 admin

Fiat is getting into the electric van market with the new E-Ducato, and partnering with global logistics giant DHL.

It’s not just the light duty arena seeing a substantive increase in battery-electric offerings as the crowded commercial van market just got another competitor: the Fiat E-Ducato.

Stellantis, Fiat’s parent company, told the world it would move quickly to become competitive in the electric vehicle market once the merger of Fiat Chrysler Automobiles and Group PSA was complete. The deal was done at the end of 2020, and they’re making good on that promise.

The new E-Ducato steps into a very crowded field facing competition like the Mercedes e-Sprinter, Rivan’s new all-electric delivery van, GM’s BrightDrop offering and the king of the segment, Ford and its E-Transit model.

But it’s not just the big names looking to make inroads in the segment, Fiat’s competing with fringe players like Silicon Valley’s Canoo, Ohio’s Workhorse Group and the even smaller Arrival, which uses “microfactories,” ditching the traditional assembly line approach vehicle manufacturing.

The newest player

Fiat’s new E-Ducato starts at about $50,500, which puts it on par with most of its competition.

Ever-intensifying competition aside, the new E-Ducato is available right here — if here is Europe — and right now. It’s assembled at Fiat’s Atessa, Italy plant, although the electric powertrain will be install at the Mirafiori facility in Turin. No word on if or when a ProMaster version comes to the U.S., although the company did say other variants would follow.

Fiat says it’s comparable to a diesel in its performance levels. The motor puts out 122 horsepower and 206 pound-feet of torque, which should be plenty to get around town. Additionally, it can add another 62 miles of range in less than 30 minutes, Stellantis officials noted.

The E-Ducato offers two different battery options — 47 kWh and 79 kWh, best-in-class for installed electrical capacity. It offers four types of charging modes, although only three are available now. With a 47-kWh battery, it travels up to 145 miles. With a 79-kWh battery, it enjoys a range of about 230 miles.

“For the E-Ducato, we started from the idea of creating not only a ‘green’ vehicle, but also a complete mobility solution, characterized by versatility, reliability, efficiency and sustainability (at both an environmental and an economic level),” said Eric Laforge, head of the Fiat Professional brand, who’s leading charge into large electric vans.

Amazon and Rivian are expanding the use of the EV maker’s electric delivery van.

“In short, a working tool to build up your business while respecting the precepts of ecology, a model ready for every mission, uncompromisingly aiming to be the benchmark in the market and to be equipped with the same capabilities as vehicles with internal combustion engines. Its 400 configurations mean it can meet the needs of all professional operators, from freight fleets and construction companies to artisans and municipal service providers.”

Following a familiar path

Like many of the other competitors in the segment, Fiat’s got a real-world partner: DHL. The global delivery giant signed on to help build a better van five years ago, but the relationship intensified when the E-Ducato hit the drawing board.

Unsurprisingly, it will purchase E-Ducatos as part its commitment to electrify most of its last-mile delivery vehicles by 2030, and 60% of its overall fleet electrified. “This means I’m looking for something like 14,000 vehicles we’re gonna buy,” said Alberto Nobis, CEO of DHL Express Europe during the press conference. “We had an opportunity to build this vehicle to our specifications.”

A pre-production version of the BrightDrop EV600 van being tested by FedEx.

It’s unclear if Nobis was committing to buying 14,000 E-Ducatos or simply that many electrified vehicles. However, the partnership between DHL and Stellantis shows the importance of catering to the market.

Similarly Rivan worked with Amazon, which is also a major investor in the company, to create the electric vans it’s currently testing in several cities across the U.S.

Arrival and Workhorse are both working with UPS, GM is partnering with FedEx on its BrightDrop vehicles. Ford and Daimler haven’t announced formal partnerships yet, but they are the two largest players in the segment so getting input likely isn’t a problem.

The new E-Ducato starts at just under $50,500, which puts in the same league as the aforementioned E-Transit which starts at about $45,000.

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Lordstown Motors in Fight for its Life

March 17, 2021 admin

Lordstown Motors CEO Burns in truck Feb 2021

Lordstown Motors CEO Steve Burns attempted to assuage investor concerns by offering detailed insight about the truck and earnings.

Lordstown Motors officials went on the offensive Wednesday afternoon, aiming to dispel mounting doubts about the EV startup’s future in light of a damning research report questioning whether it has received any real orders – while suggesting its founder and CEO is a “con man.”

Lordstown is one of numerous manufacturers getting ready to launch battery-powered pickups. The company completed a SPAC merger last year generating $675 million in cash, money it is using to finish development of its new Endurance model. Lordstown officials claim they’ve received more than 100,000 non-binding production reservations from commercial fleet users. But that’s been thrown in doubt as a result of a report published last week by short-seller Hindenburg Research.

After issuing a terse response early this week declaring that work on the electric truck is “on track” for a September 2021 launch, Chairman and CEO Steve Burns acknowledged that the company is “cooperating” with an inquiry by the SEC. Lordstown also has launched its own internal investigation, Burns revealed, though he declined to comment directly on the Hindenberg study.

Burns talks sales numbers

Lordstown Motors is engaged in beta testing its production line with the first of 57 pre-production electric trucks to come soon.

That said, Burns did provide some insight into its sales expectations. With the first of a planned 57 beta-test vehicles now being readied, “We are able to obtain more substantial levels of commitment from our prospective customers,” he said, adding

“Under these arrangements the fleet management companies agreed to use reasonable effort to obtain purchase commitments from their clients.” But those commitments will be “conditional” until Lordstown actually puts trucks into production, Burns cautioned.

There’s still a problem with the math, 20,000 “conditional” orders significantly lower than the 100,000 non-binding reservations Lordstown previously quoted.

Company officials suggested that limited manpower means it will take time to firm things up. A clearer number will emerge “over the next 60 to 90 days,” said Lordstown President Rich Schmidt.

Nonetheless, the company is confident enough in its prospects, the Lordstown founder said, it is preparing to increase the Ohio factory’s capacity to 60,000 vehicles a year. And it is speeding up development of a second product program, an all-electric RV-style van set to reach production by the second half of 2022, said Schmidt.

A confident front

Burns said he believed his company was the only one to begin automated assembly this early in the process.

While Lordstown officials aimed to project confidence during a Wednesday afternoon earnings call with analysts and reporters, there is no question company officials need to be worried about the report issued by Hindenberg, said Sam Abuelsamid, principal automotive analyst with Guidehouse Insights.

“They’re absolutely facing the fight of their life, no doubt about it,” said Abuelsamid. “I’ve always been dubious about the number of orders they claim considering they’ve never built a product before. They’re going to have to provide real evidence of what they actually have … and they need to demonstrate an actual product.”

Lordstown was founded in 2018 by Steve Burns, a pioneer in the electric vehicle space who previously ran startups AMP and Workhorse. Its sole product is the Endurance, an all-electric pickup that it is primarily targeting at the commercial fleet market. The truck takes the unusual approach of using four motors, one mounted in each wheel hub. It is expected to produce 600 horsepower, deliver 250 miles of range and tow up to 6,000 pounds.

The nascent EV maker caught a lucky break two years ago when General Motors decided to sell it one of the three North American assembly plants it was planning to close. GM loaned the fledgling company $40 million to get the deal completed and eventually invested $75 million in the startup.

CEO Burns expressed enough confidence in his team that he upped the expected production levels to 60,000 units.

Even before rolling out a running prototype, Lordstown began touting advance reservations for Endurance, something that drew the interest of investors as the company prepared to enter a SPAC, or special purpose acquisition company, reverse merger last year. The deal not only got Lordstown listed on the Nasdaq exchange – trading as RIDE – but also generated about $675 million in new equity.

Hindenburg report casts doubt

But Hindenburg Research decided to address some of the questions that Abuelsamid and other industry observers had quietly been discussing among themselves. And the report it released last week went off like a bombshell. Where Lordstown stock surged to a high of $31.80 after its SPAC deal, it fell to as low as $9.80 after the report’s release, shares closing at $15.09 as the bell sounded Wednesday. The price dropped into the $14.40 range in after-hours trading.

“Lordstown is an electric vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities,” Hindenburg said, while referring to Lordstown founder and CEO Steve Burns as a “con man.”

It zeroed in on several supposedly large orders for the Endurance, including one supposedly for 14,000 of the trucks worth $735 million supposedly placed by E Squared Energy. But Hindenburg claims the firm is a two-man operation, based out of a “small apartment in Texas,” which has no vehicle fleet.

The company plans to enter one of its trucks in a Baja race in Mexico next month for additional real-world testing.

“Another 1,000-truck, $52.5 million order comes from a 2-person startup that operates out of a Regus virtual office with a mailing address at a UPS Store,” reported Hindenburg. “We spoke with the owner who acknowledged it won’t actually order any vehicles, instead describing the ‘pre-order’ as a mere marketing relationship.”

Hindenberg’s lengthy analysis was particular harsh on Burns. It cited unnamed current and former Lordstown employees who, among other things, likened Burns to P.T. Barnum, the legendary circus owner and huckster.

During the Wednesday afternoon call, however, Burns and other Lordstown officials went to great pains to provide all the minutiae industry analysts sought during the company’s earnings call.

What we learned

The new Endurance is set to begin production at the end of September officials reaffirmed during the company’s first-ever earnings call.

The key takeaways: Lordstown is completing development of the Endurance and moving ahead on its second product line. The company lost $38 million during the fourth quarter of 2020 and $101 million for the full year. Largely due to the SPAC deal, the startup ended 2020 with $630 million in cash. It expects to end 2021 with just $200 million in the bank due to the heavy spending associated with the Endurance launch and the van project.

Whether Wednesday’s call will put Lordstown on firm ground is uncertain. What’s clear is that Hindenburg has something of a track record knocking down incipient EV companies.

Last February, the research firm gained headlines targeting Phoenix-based Nikola Corp. Like Lordstown, Nikola focuses on the commercial market and used a SPAC deal to go public. Nikola then saw a big runup in its share price while also lining up a proposed alliance with General Motors.

Hindenburg revealed a number of false or misleading statements by Nikola and its founder and now former CEO Trevor Milton – later backed up by the company’s own, internal review. As a result, Nikola’s share price collapsed and the deal with GM was sharply pared back. Milton was subsequently forced to resign when additional information about inappropriate behavior involving minors was revealed.

Now it’s Lordstown’s time in the crosshairs. The company will have to demonstrate that that is real substance behind both its truck and its business plan if it expects to survive, said analyst Abuelsamid.

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