Lordstown Motors Corp.

Greetings. Welcome to Lordstown Motors' fourth quarter of fiscal year 2021 earnings call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll turn the conference over to Carter Driscoll, Vice President, Corporate Development, Capital Markets, and Investor Relations. Carter, you may now begin.

Thank you, Operator. Good morning, and thank you to all for joining Lordstown Motors' fourth quarter and fiscal year-end 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-K and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be Lordstown Motors CEO, Dan Dinobagi, President Edward Hightower, and CFO, Adam Kroll. With that, I'd like to turn the call over to Dan.

Thank you, Carter, and welcome, everyone. To begin with, I'd like to thank the entire Lordstown team for their extraordinary efforts in Q4. I'm pleased with the progress we've made towards launching the Endurance and our financial results for the quarter. Our number one priority, of course, remains the successful launch of the Endurance full-size pickup truck. While we've experienced some supply chain challenges in building our pre-production vehicles, or PPVs, I'm pleased to report that final engineering design validation and testing are underway. and we continue to target start of commercial production and sales in the third quarter of 2022. Ed will provide more detail on where we are and what remains to be done to achieve full homologation. In terms of customer demand, we continue to see strong interest in the commercial fleet market for electric vehicles of all types, including pickup trucks. Despite the acceleration in competitors' EV pickup truck product plans, we believe the market will be underserved for the foreseeable future and will continue to grow. We believe that demand will be particularly strong among commercial fleet customers, given their focus on total cost of ownership and specific work requirements. The Endurance, with its in-wheel hub motor design, is truly unique and will offer a superior combination of handling, traction control, torque, and turning radius that hardworking fleet customers will really appreciate. With fewer moving parts than more conventional propulsion systems, we also believe the Endurance will have advantages in overall maintenance costs. Our commercial sales plan will be driven primarily by our expected production volumes. We'll undertake limited production this year, balancing the importance of getting the endurance into customers' hands with the need to manage our balance sheet, as our bill of material costs at launch will be significantly higher than our anticipated selling price. Our BOM will improve over time as the benefits of hard tooling, moving from prototype to production suppliers, the Foxconn transaction, and other initiatives kick in. As a result, at least initially, we'll be focused on selling vehicles to a relatively small number of strategic fleet partners who offer the best opportunities for long-term relationships. While the exact number of vehicles we produce will depend on several factors, including the timing of our bond cost reduction actions and future financings, I would expect production to be limited to about 500 units in 2022 and up to 2,500 units in 2023. For post-sales support, as mentioned on our last earnings call, we're continuing to work with Cox Automotive. Cox Automotive's service marketplace has more than 6,000 service centers, 3,000 partner locations, and 800 mobile technicians nationwide. Now turning to our long-term strategy. As I mentioned on our last earnings call, the conversion The electrified powertrains presents OEM startups like LMC with a very unusual opportunity to penetrate the automotive market and gain meaningful share, particularly in certain underserved segments. But success requires that we deliver scale, a differentiated commercial plan, an innovative product, a competitive cost structure, and a vehicle development platform that brings products quickly and efficiently to market. I believe a partnership with Foxconn can help us achieve each of these objectives. Foxconn has ambitions to capture a significant share of the global EV market, not just in contract manufacturing, but in key components as well. In addition to other strategic benefits, the Foxconn partnership would unlock the full potential of the Lordstown plant by getting it to scale faster. At 6.2 million square feet and 640 acres, The Lordstown complex is one of the largest internal combustion automotive plants in North America that is being converted to a state-of-the-art EV manufacturing facility. Foxconn has an excellent opportunity to fill the plant, having already announced that the Fisker-Pair program is intended to be manufactured in Lordstown. LMC and all OEMs whose vehicles are built at the plant will benefit from the increased capacity utilization, use of common components, and lower overhead costs. Scale in automotive manufacturing matters a lot. Use of shared space together with mobility in harmony or MIH open source platform that Foxconn has developed provides smaller, more specialized OEMs the opportunity to achieve the benefits of scale without being a large, fully integrated automaker. Partnership with Foxconn should also significantly reduce our raw material component and other input costs over time. As the largest contract manufacturer in the world, Foxconn has significantly better purchasing power than we would have on our own, as well as a global integrated supply chain network and the logistics capabilities necessary to help us reduce vehicle production costs and minimize our supply chain risks. We also stand to benefit from Foxconn's expertise in hardware and software integration, critical to EVs, given their expertise as a multinational electronics manufacturer. As we grow together, these benefits should only improve over time. Finally, a partnership with Foxconn could extend beyond a contract manufacturing agreement. When we announced the transaction, we stated that Foxconn and LMC would explore a joint venture arrangement for the development of new electric vehicles utilizing Foxconn's MIH common platform. This was an important part of the deal because, in our view, LMC would greatly benefit over the long term from a scalable vehicle development platform for future vehicles that will allow us to compete with much larger vertically integrated OEMs. The use of common vehicle architecture systems and components off of MIH provides us that opportunity. In addition, a commercial relationship with Foxconn could open up opportunities to utilize LMC-developed vehicles for markets outside of North America for both MIH vehicles and potentially endurance-based vehicles. Since our last earnings call, we have made substantial progress on the terms of a contract manufacturing agreement with Foxconn. We have also had ongoing discussions regarding a joint product development agreement under which we would develop new vehicles in collaboration with Foxconn off the MIH platform. In connection with the joint development agreement, we have considered capital raising alternatives and made a specific proposal to Foxconn. While our discussions with Foxconn have been constructive and are ongoing, at this stage, no definitive product development agreement and funding arrangement has been reached. We and I believe Foxconn understand that reaching a conclusion as soon as possible on this element of the transaction is important for the overall success of our partnership. I also believe that a joint product development agreement with an appropriate funding structure would greatly enhance our ability to raise the additional capital necessary to not only fund new vehicles, but to bring the endurance into production in Q3. Clearly, we in Foxconn have more work to do. In closing, Notwithstanding the challenges in front of us, I am pleased with the progress we have made on moving the endurance towards launch readiness and building our relationship with Foxconn. We have a unique vehicle, and our entire team remains totally energized by the compelling market opportunity. With that, I'll turn the call over to our president, Edward Hightower. Edward joined the team shortly after our last earnings call. He has 30 years' experience serving in product development, engineering, manufacturing, commercial, and senior executive roles between Ford, BMW, and GM, including leading GM's $15 billion global crossovers business as the executive chief engineer and vehicle line executive. Ed?

Thank you, Dan. I joined Lordstown Motors as president last November, and I am very excited to be part of the team and to participate in my first earnings call. When I joined the company, I was in complete alignment with Dan and the board in that we had two objectives. to launch the Endurance in Q3, and to build our product development relationship with Foxconn. I will start by giving you an update on the Endurance launch. Over the last quarter, we have strengthened our team with professionals that possess significant experience with new vehicle launches. Our organization and launch governance structure is stronger than it has ever been. We have brought automotive industry best practices and disciplines to Lordstown Motors to ensure the quality timeliness, and success of the endurance launch in Q3. Our new Lordstown production system embeds these practices and is driving us to make decisions based on facts and let engineering readiness, quality, and part availability govern the speed of the launch. Our pre-production vehicle or PPV plan entails three tranches of build programs to maximize opportunities for learning, build process adjustments, and make part-pedigree improvements from one group to the next. These three tranches are comprised of, one, engineering and validation PPVs, two, homologation and certification PPVs, and three, market demonstration PPVs. Starting with engineering and validation PPVs, this BUILD program is underway. These vehicles will be used for on-road testing, including high-mileage durability validation, software validation, including our over-the-air update features, crash performance validations, final low-mew or low-friction brake calibration and validation, which is currently underway in Valdette, Minnesota, ADAS, or Advanced Driver Assistance System, calibration, corrosion testing, and NVH testing. Many of these tests have been simulated using CAE or computer-aided engineering and will be confirmed during this phase. Further, these vehicles are being produced on the Lordstown production line as opposed to in a prototype shop. This gives our manufacturing associates early experience in building the vehicle in the plant environment using actual production equipment. This first tranche of PPVs is comprised of 64 pre-production vehicles of which we have completed 27 full vehicles and 10 test leads for passive safety testing. We expect to complete this bill group by early April. Our next tranche of PPVs will be used for homologation and certification testing, including tests for the EPA, CARB, and the Federal Motor Vehicle Safety Standards, or FMVSS. In addition to a series of frontal, side, roof, and rear crash requirements, FMVSS include requirements for other vehicle functions including passive safety, lighting, visibility, defrost and defog, wipers, and tire pressure monitoring. We are working to certify the endurance for all applicable EPA CARB and FMVSS standards by late August to support our Q3 commercial release production or CRP launch. We expect to finish building this second tranche of PPV by late April. And finally, our third tranche of PPVs will include market demonstration vehicles. These PPVs are valuable tools to demonstrate the performance of the endurance to prospective customers. We continue to experience strong interest in the vehicle, especially in this supply-constrained environment, and are confident we will sell the limited number of vehicles we will have available through 2023. However, commercial fleet buyers are highly discerning and need to see and experience the vehicle's capabilities before placing binding orders, which is why we believe it is important to get vehicles in their hands. We cannot wait for them to experience the Endurance's superior handling and maneuverability enabled by our in-wheel hub motors. We plan to participate in important trade shows such as NTEA Work Truck Week, NAPA, and ACT Expo. We expect to finish building this third and final tranche of PPVs by mid-June. Switching to Foxconn. As Dan mentioned earlier, we have been working on a joint product development agreement with Foxconn for Lordstown to design, engineer, develop, industrialize, and launch battery electric vehicle programs using Foxconn's Mobility in Harmony, or MIH, open platform. We have an experienced and motivated team with the capability to create new vehicles from concept through launch. If reached, this agreement will create an innovative business model where we would develop new vehicles for ourselves and potentially other Foxconn OEM customers globally. These new vehicles would be built for North America at the Lordstown, Ohio plant and at other Foxconn contract manufacturing locations around the world. The objective is for OEM users of this flexible MIH platform, manufacturing footprint, and supply chain to achieve production scale at lower volumes and with a shorter time to market. For LMC in particular, a joint product development agreement with Foxconn would provide a scalable vehicle development platform, reduce our product development costs, and increase the breadth of our product portfolio. As Dan stated, while our discussions with Foxconn have been constructive, at this stage, a definitive agreement has not been reached. Thank you, and I now turn the call over to Adam.

Thank you, Edward. Good morning, everyone. I share both Dan and Edward's enthusiasm for our progress in the fourth quarter and the opportunity we have going forward. I'm also quite focused on our challenges. As all of you are seeing with LMC and our peers, Launching a new vehicle is an incredibly challenging endeavor, made more complex when it's your first and only vehicle as a startup. We had a very active year on all fronts, operational, engineering, financial, and strategic, particularly in the fourth quarter. I am delighted by how our team members have navigated through 2021, given the macro headwinds, our strategic shift, executive changes, and COVID-19. Let me begin by reviewing the financial considerations of our proposed partnership with Foxconn. In late September, we announced the agreement in principle for the sale of our plant and intention to create a deep alliance. About six weeks later, we announced the definitive asset purchase agreement regarding the sale of the Lordstown facility for $230 million plus reimbursement of certain expenditures incurred between September 1st, 2021 and transaction close. To date, we have received $200 million from Foxconn, including a $50 million common stock investment in October and an aggregate of $150 million in down payments of the Lordstown plant purchase price in Q4 and the early part of Q1-22. Now turning to our results. We ended the fourth quarter with $244 million in cash on hand. That is $79 million more than the midpoint of our guidance of $150 to $180 million. The outperformance is the result of disciplined spending generating permanent savings, along with certain deferred capital and operating items, favorable working capital, and additional equity raises. The permanent savings were largely associated with capital investments in the plan. We delayed our planned Q4 investments in hard tooling, commencing the spend in the first quarter of 2022. In total, during the fourth quarter, we raised $182 million of financing, $150 million related to our agreements with Foxconn, with the balance being primarily common stock issued under our equity purchase agreement. For the full year, we expended $674 million for operating cash flow and capital expenditures, and raised $288 million from financing activities. The capital raises consisted of the $150 million from Foxconn, $82 million from the exercise of warrants, and almost $56 million from the equity purchase agreement and employee option exercises. Turning back to Q4, our net loss of $81 million continued to meaningfully improve sequentially from the first, second, and third quarters. Our R&D costs of $59 million were relatively in line with Q3 and meaningfully lower when compared to Q1 and Q2. In Q4, in comparison with Q3, we spent more on vehicle components as we procured the materials for our PPB build, along with personnel in both engineering and manufacturing, offset by lower outside engineering support. The improvement compared to the first and second quarters was primarily driven by a decrease in prototype component costs as we moved from consuming parts or testing to building PPP. In addition, like everyone, we are experiencing elevated freight costs as supply chain issues are driving up our need to use expedited freight. SG&A expenses, 26 million, declined 17% quarter over quarter. due to lower legal and outside consulting costs partially offset by higher personnel, insurance, and IT infrastructure investments. We continue to incur significant legal expenses resulting from ongoing litigation and the SEC investigation. For the quarter, our legal costs were approximately 30% of total SG&A and more than 8% of total operating expenses. That's down from over 40% of SG&A in Q2 and Q3. Unfortunately, I anticipate the current level of spending to persist until we are able to resolve some of the larger matters. In addition, we continue to invest in our people, processes and technology to establish the proper infrastructure for our future that will contribute to higher SG&A going forward. As we seek to hire permanent staff and get new systems running, our consulting and professional fees will be elevated. For the full fiscal year, we reported a net loss of $410 million. Total operating expenses were well below guidance due to the fourth quarter results as discussed. R&D of 284 million compares to our guided range of 320 to 340 million. SG&A was 105 million at the bottom end of our 105 to 120 guided range. Included in our net loss were non-cash charges of $42 million for stock comp, intangible amortization, and the warrant mark to market. Looking forward to 2022, we are focused on launching commercial production in Q3. As Dan mentioned, we anticipate a limited production of about 500 units this year. We have always expected our bill of materials would be above our anticipated price for the endurance at launch and over the medium term. It is simply a function of a low volume launch environment where we leverage a higher share of prototype components and tooling in conjunction with disciplined financial management and continuous design enhancements. Hard tooling represents the largest opportunity to drive down our bill of materials. If we are able to raise sufficient capital to fund all the planned investments in hard tooling, most of which are expected to occur in 2022, we will begin seeing lower piece prices and the overall bill of materials per vehicle in late 2022 and into 2023. As previously disclosed, even with the sale of the Lordstown facility, we will require substantial additional capital well ahead of reaching the commercial launch of the Endurance to execute our business plan. And as Dan mentioned earlier, we believe a joint product development agreement with Foxconn with an appropriate funding structure is critical to our ability to raise the capital we need to launch the Endurance production in Q3 and to expand our product portfolio. With our advisors, we continue to evaluate additional financing alternatives, including private or public equity transactions, debt financing, and program finance structures, among others. We are entering a critical phase for the company. While the endurance is on the cusp of commercial production, the Foxconn transaction is not yet where we need it to be, and we do have to raise significant capital in the coming months to execute our business plan. Our 2022 outlook depends on many operational, engineering, macro, supply chain, geopolitical, regulatory, and other factors that together with our ability to raise capital will influence how we execute our plan and deploy capital during the year. With that, I'll ask the operator to open up for questions.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions, and that's star one to ask a question today. Thank you. Thank you. Pause a moment to Paul for the queue. Our first question is from the line of Joseph Spack with RBC. Please proceed with your questions.

Good morning. Thanks, everyone. I guess just a bunch of questions here, but maybe let's just start on some of the delivery numbers you threw out, Dan. So, you know, 522, I'm assuming that's pretty fourth quarter weighted given you're not starting until the third quarter. And then, you know, up to $2,500 for 23. So if we think about like an average build rate in 23, it's not that meaningful a step up from, you know, probably what you're exiting 22. And I'm just trying to understand, is that something to do with the operations and sort of, you know, switching over to Foxconn? Is it the supply stamp issue? Or how should we sort of think about that sort of production rate, you know, exiting 22 into 23?

Yeah, I mean, it's driven primarily by the BOM glide path. So as we get the BOM costs down, we'll accelerate production. So even in 23, it's back end weighted, and we'd see a higher production rate in the back half of the year. So we're just balancing the BOM costs, the need to get vehicles into the hands of customers with the costs of producing the vehicle while the BOM cost is being reduced.

Maybe that's a good segue into the next question. It sounds like the biggest factor here is getting the funding and securing that hard tooling. My understanding is with this new arrangement with Foxconn, when it's completed, it's a much more variable model. What can the, you know, 23 exit gross margin rate look like?

Yeah, we're not giving guidance on that. I mean, the biggest impact on the BOM cost is going to be hard tooling and other VAVE initiatives. And those were, as I think Adam mentioned, we deferred some of the CapEx spending Q4 into early Q1, Q2. So, some of that benefit's delayed. So that's the biggest influence on the bottom cost, not the handover to Foxconn.

Okay, and maybe this is sort of my lack of understanding about the sort of transaction, but why is sort of the hard tooling, is that your responsibility or Foxconn's responsibility?

It's our responsibility.

And then it's handed over to them?

No, no, manufacturing is being handed over to them. But we're the ones investing in and owning the hard tooling, the component tooling. Okay.

Which is Joe's, Adam. That's the standard way. Every OEM owns their tooling, right? The tooling itself is IP.

Yeah. Joe, this is Ed.

In addition to that, over time we'll be able to optimize our supply chain, go to more higher volume suppliers. And as we make those transitions from soft tools to hard tools, so that will contribute to our costs going down as well.

Okay, thanks. I'll pass it on. Thank you.

Our next question is from the line of Emmanuel Rossner with Deutsche Bank. Please receive your questions.

Hi, good morning, everybody. Morning. So I guess it seems like the priority number one in addition to the making progress on trying to ramp up towards production is to secure some capital. Can you give us a sense of how much capital you think is needed in the short term?

Yeah, Emmanuel, this is Adam. So we've built an operating plan that expects us to get through the year and continue to fund the tooling. There's obviously levers we can pull. and conserve liquidity, which always come with significant trade-offs, like we talked about the impact on piece price. But to execute our operating plan for the year, we need to raise in the range of $250 million.

Okay. And that would include financing the hard tooling for the launch? Yes. Okay. And I guess, sir, as you approach various potential sources of capital, I think the, um, probably the, the story, you know, they will want to hear is, you know, what are the ultimate economics of sort of like your new business model, uh, the contract manufacturing economics, both no shorter term, but also if, if you're able to expand the relationship with Foxconn, are you, are you able to, uh, to give some details around what it is that an investor, you know, putting capital. into Lordstown could expect over time?

Yeah, so that's why the joint development agreement with Foxconn is an important component of the overall transaction. It does a number of things for us, I mentioned in the call. It gives us a competitive vehicle development platform, gives us the benefits of scale, gives us access to a broader product portfolio, licensing and commercial opportunities with Foxconn inside and outside the U.S., stronger supply base, including components that are sourced, originated, manufactured by Foxconn. So that, to me, is what makes it investable, the future vehicle development platform. There's also, we're not giving up, obviously, on the endurance. We need to get that into production. Full-size pickup truck is going to be a unique product out there. And we think that there could be derivatives and future vehicles built off that platform as well. But that is the story that makes, I think, the company investable. which is why this joint product development agreement is so important. And quite frankly, I am disappointed that we're not further along. The relationship with Foxconn is very positive, and the discussions are ongoing, but we need to bring that to a conclusion, and I'm hopeful that we'll get there.

Okay. And just to understand, I guess, what is already agreed upon and what is being discussed. So the part that is agreed upon is essentially the contract manufacturing for The pickup, the part that isn't is an agreement on utilizing their platform for future vehicles.

That's right. And an appropriate funding arrangement around that.

Understood.

And then one.

To be clear, sorry, the contract manufacturing agreement is not finalized.

We've made significant progress. We filed a draft with CFIUS, but it's not yet final. Okay.

And then a final one. I guess on the endurance, so 500 units already as soon as this year, can you give us a sense of who do you expect these trucks to go to? Are you able to disclose customers? Is it a lot of trucks to a few customers? Is it many customers taking a couple of trucks each? Any sense of who your early customers are?

Yeah, I mean, we're talking to all the fleet management companies, but in particular the larger fleets. And, you know, which customers we sell to will depend on a number of factors, including, you know, where we have service and maintenance. You know, we'll try to do it in an efficient way. But as I mentioned in my comments, we want longer-term strategic relationships with customers. So it'll be, you know, given 500 vehicles for the year, it'll be a fairly limited group.

That makes sense. Thank you very much. Thanks, Emmanuel.

Our next question is kind of from the line of Mark Delaney with Goldman Sachs.

Please proceed with your questions. Yes, good morning. Thanks very much for taking the questions. I was hoping to start maybe with the pricing to think about for the endurance. Cost has gone up quite a bit for the industry. You're talking about some specific cost challenges now for Lordstown. So should we be thinking about a much higher price point in terms of pricing for the pickup truck?

Good morning. This is Edward. Thanks for the question. We feel that our value proposition for the endurance plus the economics and availability of battery electric full-size pickups in the market right now really justifies our price point. We're launching the vehicle with a significant amount of standard options, and that's how we, the $63,005 price that is in our filings.

Got it. Okay, that's helpful. And then as you're thinking about the $250 million of capital needed to support the hard tooling and the plan for this year, would you envision that supporting a positive gross margin later in 23 with that level of hard tooling?

Well, not quite into 23. I think, you know, as Dan said, the guidance is up to 2,500 units next year. We've got a glide path that will bring the bomb down towards break-even, but it's probably over 18 months. We need to make, you know, there's opportunities to make design improvements, supply chain enhancements, other VAVE efforts, the Foxconn relationship as well, looking into their supply chain and partners to bring down costs. So we think it's over probably 18 months.

Or even into 2024, yeah.

Okay, that's very helpful. And maybe just help us think about how modular hard tooling costs are. You talked about what's necessary for capital to get up to $2,500 for 23, but if it was $5,000 or $10,000, how much capex might that cost? Well, I think Adam provided the number $250 million range for capital.

all in the tooling isn't isn't all of that so we haven't we haven't gone out with an exact number on how much tooling we need but the tooling varies I mean you're talking different tools for different suppliers some tooling you know has a greater investment than others depends on where in the vehicle you know I mean you might need a tool for the trailer hitch you know I mean there's pieces of the vehicle door hinges things like that so they can range from small to large

Yeah, and the way we approach it, the way we approach is we look at the breakeven point. We look at the breakeven point for any tooling investment in terms of the number of units we need to produce to breakeven. So obviously the high priority tooling is the low breakeven points and then, you know, as we go from there. So you asked how modular it is. We can dial back certain tooling that has a longer payback. if we need to. But again, as Adam mentioned, there are trade-offs in terms of how quickly you get the bond cost reduction. So that's kind of the balance we're trying to strike.

But it's not all at once. It's over time. Got it. Thank you.

I'll turn it over. Our next question is from the line of Adam Jonas with Morgan Stanley. Pleased to see what your question

Hi, everybody. Dan, regarding the contract manufacturing agreement with Foxconn, which is still in progress towards an agreement, it's my understanding that – am I correct in my assumption that securing a contract manufacturing agreement is a prerequisite for consummating the sale of the plant to Foxconn? Is that correct? That is. That is true. It's a condition. Okay. Understood. And in any event, however likely or unlikely, that you do not reach an agreement with Foxconn, what's the plan B for the Lordstown plant? Are there contingencies in place? And I'm curious if there's any breakup fees associated with that plan. Let's call it unlikely event or possible, but, you know, event.

Yeah. I mean, look, it's certainly possible that we don't conclude an agreement, but I think it's highly unlikely. As I said, the relationship has been good. The discussions are ongoing. They understand, I think, the importance of all the elements of the agreement, including a joint development agreement. And I think I will work hard to get there, but they're really, you know, we're not considering those contingencies. If we get to a point where we can't get to a joint development agreement or conclude a contract manufacturing agreement, we certainly will have to consider alternatives, but we're not at that point yet.

Okay. You understand why I'm asking. I'm just kind of, cause it does seem that Foxconn's in a position to really dictate the future of that plant. And of course the future of your, your company overwhelmingly, which is, which is fine. But, um, It sounds like we crossed that bridge and that Plan A is the focus and getting that across the line.

Yeah, I mean, look, we are all in with Foxconn, and we're very confident that we can make the relationship work. It's got to be a win-win. The concept of the joint venture, joint development agreement for future vehicles and MIH has been on the table from the beginning. It was incorporated in the original deal. There are commitments there for them to work in good faith to reach that agreement. We intend to hold their feet to the fire to make sure they do. And I'm confident we'll get there, but there's always a risk that we don't. And if we don't, then we'll have to do something else. Thanks, Daniel. Appreciate it. Good luck. Thanks.

The next question is from the line of John Murphy with Bank of America. Please proceed with your question.

Good morning, guys. I just wanted to follow up on the answer, Adam, you gave to cap raise. I mean, I think all of us on this phone have been in this industry for a few decades, and $250 million is not a lot of money. And we're all – I mean, to get through this year to raise $250 million, it sounds like you're scratching and scraping still. I mean, what's the real number you need? I mean, are you getting – more money from Foxconn? Because you're at a stage in this company where you don't want to just be scraping and scrapping to get by to the next day or the next quarter or that launch. I mean, you've got to have capital to blow this company out and really create some good product and grow. I mean, the 250 might be what you can get through this year, but what do you really need?

Well, Look, I mean, what we really need, and that's, again, I'm going to go back to the joint development agreement because that is the vehicle development platform going forward where we can get to the benefits of scale and a competitive product. We can get products to market quicker and cheaper and that sort of thing. But we need deep collaboration with Foxconn to do that. I think what will give investors confidence is, And that is if we get to an agreement and we have appropriate funding, meaning some incremental investment from Foxconn as tangible proof that they're supporting the venture and they're all in on it. So I think that's what we need to turn the corner. I think the, you know, what we need to do in terms of the endurance bomb cost is fairly clear, right? We've been at this for a while now. We know what we need to do to get the bomb cost down. It's going to require, you know, more capital as well. But we have to take one step at a time. First, we have to prove that we have, you know, kind of a strategy that's investable and we have a path to get there. I think the 250 will go a long way to getting us into production and proving that we can actually certify and sell a vehicle. I think the performance of the vehicle is going to be great. I think when people see it, and it'll be one of the few full-size pickup trucks out there, I think we'll have opportunities to improve the endurance with a partial redesign over time. And at the same time, in parallel, we can work on the first vehicle or two off MIH, which we think we can get to market within 24 months or so. So I think we're building one step at a time, but it starts with this deeper relationship with Foxconn and some Support there and then we'll you know have a full funding plan around it, but you're right It's you know we're not going to sit here scraping by you know living quarter to quarter the 250 we think you know we're comfortable that gets us through the year and into 2020 23 and allows us the time to prove that we can actually execute and we deserve People's capital for you know for other things Okay, a second question on the the three to four month window

you seem to think you'll get CARB, NHTSA, and FMVSS, you know, testing and everything done. I mean, what is traditionally the window for a truly brand-new vehicle to get regulatory approval? Because three to four months seems like pretty quick.

No, we have a detailed timeline, and that does get us through each of the different tests. and certifications and portfolio homologation within that all this summer. We'll complete the build for that tranche of vehicles in April, and we have a timeline that maps us out getting all of that certification by mid to late August.

Okay, but that three to four month window, is it like for a truly brand new vehicle? I mean, you've done this a lot. I mean, is that something you've done in the past? Because that sounds, I mean, I just got to admit, it sounds awful quick.

Yeah, I mean, the timeline is aggressive, but it's underway right now. A fair amount of it has been done. A lot of it has also been analyzed through CAE. And so, no, we're confident that we will meet that timeline.

Okay. And then on government support, I mean, the Build Back Better plan has some pretty aggressive incentives for UAW-built vehicles. Could you just remind us the the workforce at Lordstown, and do you think you would qualify for that incremental benefit of unionized labor producing the vehicle or not?

Yeah, I mean, our workforce isn't unionized at this point. When we transfer the plant to Foxconn, that's really more of a Foxconn issue than our issue. We don't have a view one way or the other towards unions. It's up to our workers to decide whether they want to be organized or not, but To my knowledge, there's no union activity going on in the plant at the moment.

Okay. And then just lastly, I mean, it's hard to bet against each of you individually in any way in your functions, you know, given your history and what you've done in the industry. So we have a lot of respect for you. But in each of these startups, EV startups, there's traditionally a founder and sort of, you know, an alpha person that's kind of just truly pushing things through and has had a vision for the company. Traditionally, that's been the founder, and that's certainly not the case the moment the founder is gone. So, Dan, I mean, there's kind of this intangible of kind of getting all this stuff done and pulling it together, and we all know it's a tremendous feat to execute what you've done so far, but to really get this over the finish line and viable, it kind of takes sort of one person to really just spearhead this whole thing. I mean, you know, who is that? Is it you, Dan? Or is it Ed? I mean, how should we really think about this? Because when we look at all these other companies, we have this, you know, single founder that is, you know, responsible for absolutely everything in a kind of a wild, insane, complicated way. And it's not necessarily apparent here. I mean, who is that person? And, you know, how confident are you, you know, that that person is really going to be able to get this done?

So, John, I've known you for 20 years. I'm insulted that you don't think I'm an alpha man.

No, I think you're an alpha male in everything you do. But, like, this is an umbrella that is wide.

You know that.

I mean, you know, I know we know, but, like, it's up to a lot. I mean, and just, and the founder sort of in that sort of wild vision has changed here, right? I mean, you know, it's become sort of more practical and deal-focused, which might be the direction he needs to go in. So you might answer it that way. But, I mean, in these other situations, we have a single person that is truly tasked with everything. And, you know, you've got a lot of very good players. But I'm just curious, Dan, how you think about that.

So, look, I've been around the industry for a while. I worked for Carl Icahn for 10 years. I've been through challenges. And this is one of the most challenging situations I've seen. But I knew a coming in, right? I knew what I was getting into when I joined the company. And it's played out pretty much exactly as I thought it would. I'm maniacal, maniacal about getting this done, okay? You know, I believe in the benefits of the Foxconn transaction. I'm not saying, okay, they're going to solve all our problems. We've got to solve our own problems. We've got to execute better. As Ed mentioned, I mean, operationally, we're as good as we've ever been. I know what I know, and I know what I don't know. That's why Ed's here. I mean, Ed is a 30-year veteran who's launched big programs, who's done things more complicated than this. Adam is a top-notch CFO. We're bringing in engineering talent. You know, it's going to be about talent and our own ability to execute. The strategy part is kind of my thing. I think the smaller OEMs, most of them will not survive because scale, as I said earlier, does matter a lot in this industry, and you're going up against big players. So you've got to pick your spots. You've got to, you know, figure out a way to be competitive without being a vertically integrated OEM, you know, $150 billion OEM. And so we're trying to be smart about that. And I think, you know, you know, I said early on, you know, we're all in on Foxconn, but we need to actually prove out the benefits of that relationship. And it's got to be a win-win situation. And, you know, it's not a done deal. It's not a sure thing by any means. But, you know, our relationship is strong. I think we're going to get there. And, you know, if you want to know who the alpha male is in this company, you're talking to him. It's me. Okay. I appreciate it, guys. Thank you so much. All right. Thanks, John.

Thank you. At this time, we've reached the end of the question and answer session. I'll now turn the call over to Dan Ninovaci, Chief Executive Officer, for closing remarks.

Thanks, Operator, and thanks to all those who participated in the call. I'd like to close by thanking our shareholders for their support. It has not been an easy year. I'd also like to again thank the LMC team for all the hard work that has us where we are today. I'm very proud of the fact that our core team, manufacturing, engineering, and corporate, has never let the challenges and distractions overwhelm us. In fact, our program management and business processes have never been better and continue to improve every day. I'm also grateful that we've been able to attract some great new talent to the organization, and recruiting the best automotive talent, especially in engineering, is our top priority. Thank you, and we look forward to speaking with you next quarter, if not sooner. Thank you, operator.

You're welcome. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.