Lordstown Motors Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Lordstown Motors first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your host today, Carter Driscoll, Head of Investor Relations. Please go ahead.

Carter Driscoll Thank you, operator. Good afternoon, and thank you to all for joining Lordstown Motor's first quarter 2021 earnings conference call. To supplement today's discussion, please go to our IR website to view our press release and investor deck. Before we begin, I want to call your attention to our safe harbor provision for forward-looking statements that is posted on our website and is part of our quarterly update. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our Form 10-Q and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be Lordstown Motors founder, CEO, and Chairman Steve Burns, President Rich Schmidt, and CFO Julio Rodriguez. Steve will provide a strategic update on the business, followed by Rich, who will give a more detailed update on production, and then Julio will cover the financial results, followed by Steve, who will provide our outlook and closing remarks. With that, I'd like to turn the call over to Steve Burns.

Thanks, Carter, and welcome to everyone. Our mission here at Lordstown Motors is to be the leading manufacturer for electric light duty trucks in the United States. Our first vehicle, the all-electric endurance work truck, is on track to start limited production in late September, and we expect to start deliveries later in fourth quarter. As a reminder, the Endurance is a full-size pickup truck that we believe can achieve the equivalent of 75 miles per gallon and travel up to 250 miles on a charge. Today, I'm very excited to announce a major milestone. We have started physical crash testing of our beta vehicles. We have passed every test we have taken. on the first attempt, including the full-speed frontal and the side pull test. The data results from the physical crashes correlates very closely to our software model, and we are therefore reiterating our belief that we can achieve a five-star safety rating, front, side, and rear, for the final version of the Endurance. To date, the Endurance has met the Front Impact Federal Motor Safety Standard, which is FMVSS 208, and the side impact FMVSS 214 requirements through these actual crash tests held at the federally approved TRC test facility in Ohio. These are the two most difficult tests for any vehicle, and we pass the requirements with our beta vehicles. These are critical milestones for us and remove some of the biggest technical barriers. This provides us a solid foundation as we complete our development and validation work. We are continuing to work on establishing relationships with fleet management companies that we believe can be the basis for meaningful revenue once the truck is ready for sale and we can demonstrate that it performs to our expectations. These include our previously announced series agreements with Holman, as well as a recent agreement we've entered into with Pride Group. We are also in discussions with several charging companies and infrastructure providers to help us provide a simple, seamless solution for our potential customers. Our ability to produce enough vehicles to satisfy our expected market demand depends on many variables, such as suppliers and passing all required regulatory hurdles, and also our access to capital. Our research indicates a very robust demand for our vehicles. However, capital may limit our ability to make as many vehicles as we would like. And as such, we are constantly evaluating our capital needs and the various types of capital available to us, including strategic capital. As the automotive world speeds towards vehicle electrification, it's starting to be clear to many that an electric full-size pickup truck with a 250-mile range is going to be quite attractive to a large portion of the market. As a new OEM, we are often asked, how we are able to be first to market in the highly competitive pickup truck category in the U.S., and how are we able to offer the Endurance at such a competitive price point? Well, we have two major advantages that have enabled us to reach our progress to date. First is our innovative technology. We believe that the Endurance will be the simplest mass-produced truck ever made. Far simpler and smarter than than any internal combustion vehicle, and even simpler than any EV on the road today. Our innovative hub motor-based architecture enables us to use advanced proprietary software-based motor control rather than mechanical routing of power to each wheel. The result is a smart pickup truck that is robust enough to handle the most demanding of duty cycles, but easily fueled, maintained, and serviced and yet can be offered at an attractive price point to our customers. And this is just our first model. Our goal is that subsequent options will include things like advanced informatics and crash avoidance features that we offer through over-the-air software updates. Another expected benefit of the physical simplicity of our vehicle is increased uptime for our customers. which translates into a lower total cost of ownership, the key metric that drives customer demand and product loyalty. We have been conducting robust testing of electric hub motor and vehicle design over the last year, including entering the Baja race. The race allowed us to validate our vehicle performance in literally the harshest of environments. While we are still learning how to optimize fast charging in such a terrain, We had no mechanical issues in the race and were able to accomplish two important goals. One, validate our hub motors, frame, thermal management system, and battery pack. And two, advance our DC fast charging capabilities. We learned that our production hub motor design is well suited to perform in low traction environments like Baja sand. And our battery pack is resilient to high torques and high impacts. We also learned that our thermal management system was able to compensate in the demanding Baja race environment. For DC fast charging, the race requirements for quick recharging prompted us to modify our DC fast charging capabilities months earlier than we had planned. As a point of clarification, our production battery pack worked to the expected range, and its mechanical performance was flawless. The reality of any battery pack is that it has a fixed amount of energy. Relative to the energy consumption of the vehicle, sand and loose soil has four times higher coefficient of friction than a paved road does. Our energy usage was on par with our simulations, increasing our confidence that our vehicle's range will meet the 250 mile target for an average customer duty cycle. Finally, Forty miles of Baja is enough evidence that our thermal and powertrain performance assumptions are correct in such extreme use case. Final testing and validation for our production vehicles will be completed at greater than 500,000 miles of paved and hard-packed dirt roads. The endurance customer will receive a vehicle with amazing performance and safety pedigree. In addition, we are thrilled to have the opportunity to illustrate the capabilities of our endurance demonstration vehicle to the United States Army as a potential vehicle for the ELRV, which is Electric Light Reconnaissance Vehicle Program. And we look forward to working with the U.S. Army should the opportunity present itself in the future. Our second advantage is in the production readiness for scale. Our former GM facility has now been upgraded to EV readiness with full stamping, robotic body welding, assembly, and paint. This plant would normally have required billions of dollars of investment to build as a greenfield. Our team is very proud of the betas we have built here, proud of their quality, safety, and drivability. One very important production note we want to remind you of is our 800,000 square foot propulsion facility, which will manufacture our battery packs and electric hub motors. And it will be one of the largest battery pack lines in North America and the largest hub motor facility globally. This will be an amazing accomplishment, and we fully expect our investments in our battery pack design and its automated production to provide us with a key competitive edge, both in cost control and pack quality. The first phase of the pack line is installed and is being tested currently. The line will make body modules that contain over 6,000 individual cells that are assembled into every endurance, and it will do so without human hands ever touching the cells. It is a mechanical wonder, and we believe will be a huge strategic advantage for us. Next, we will be building out our hub motor production line this summer. We can't wait to show everyone our vertically integrated factory during Lordstown Week starting June 21st. In addition, we have established in-house production of key components and secured critical supply chain partners to support our ability to scale. This includes agreements with semiconductors, inverters, cells, and frames. Although COVID has constrained the automotive supply chain globally and has caused material increase in our R&D expenditures, we have been proactive in this effort. Finally, I want to remind everyone that we have begun work on our second vehicle, an all-electric van. It's built on the endurance chassis, which leverages many of the same parts, engineering, and existing supplier agreements. And we will share a prototype with you this summer. Our hub motor-based skateboard is especially well-suited for a van because of the lower floor height that results in more cargo space and has easier access and regress. Leverage is the way to build a strong, multifaceted automotive company, and we are leveraging much of the endurance technology in the van and all our future vehicles. With that, I will turn the call over to Rich to discuss our progress on production, engineering, and regulatory compliance.