The bankruptcy of Lordstown Motors Corp. is, in one sense, almost numbingly straightforward: Five years into existence, and having burned through more than $1 billion, it had delivered a sum total of six electric pickups.1 A shade less rare than Willy Wonka’s golden tickets, the Lordstown Endurance was infinitely less lusted after. There were other notable elements — a revolving door of executives, the overhyped SPAC, the endorsement from former President Donald Trump — but the basic problem was that, in a business where survival means mass scale, Lordstown’s sales bordered on the bespoke.
Yet there’s another dimension to this, one that reaches the whales of the industry, like Ford Motor Co., General Motors Co., and Tesla Inc., to name three. That dimension is the type of vehicle Lordstown seeks to electrify: Pickup trucks.
Americans famously love big vehicles, with SUVs and trucks accounting for two-thirds of the market. The large truck segment, which includes the best-selling vehicle model of any sort in the US, the Ford F-150, alone accounts for one-in-seven of every new vehicle sold. Detroit loves trucks, too, because they sell at premium prices, averaging about $63,000 apiece, higher than for many luxury cars like the Audi A4 or Mercedes C-Class. The disproportionate profits from trucks (and SUVs) explain why Ford, for example, no longer sells cars in the US apart from Mustangs.
Electrifying cars is a difficult enough proposition but you can at least streamline a sedan to help offset the weight of a big battery. Trucks, particularly the almost comically macho versions popular in the US, have the aerodynamics of a dumpster. Getting the range to a decent level mostly means installing bigger batteries, which also add more weight, raising the cost.
Consider the Ford F-150 Lightning, the electric version of its marquee model. As Kevin Tynan of Bloomberg Intelligence points out, the sticker price was slightly below $40,000 when orders launched in January 2022, but that has since jumped to almost $60,000, with an average transaction price of around $85,000. Rivian Automotive Inc.’s R1T starts at about $73,000. Forthcoming electric trucks from GM and Tesla aren’t likely to be cheap, either.
Even with bigger batteries, having your vehicle do much more than just drive you from A to B can seriously cut into the advertised range. Drivers of any type of EV will be familiar with what cranking up the air conditioning for an extended period can do to how far you can go on a charge. But loading up a truck or having it tow something — ostensibly what pickups are there for — seriously limits range. In one towing test conducted by Car and Driver last summer, the Lightning, the RT1, and GM’s Hummer EV saw their regular ranges cut to about 100-140 miles, much lower than the 200-300 that seems more palatable to drivers.
The added twist here is that, while towing capability might seem a high priority, it really depends. Alexander Edwards, chief executive of Strategic Vision, a consumer behavior consultancy, tells me that about two-thirds of full-size pickup owners use their truck for recreational towing at least once a year, according to this year’s edition of their New Vehicle Experience Study, which has been running since 1994. For electric pickup owners, that drops to 44%.
This fits with a subtle difference in the all-important factor: What drivers want vehicles to project about themselves. “If I want to show I’m capable, powerful, tough,” then I opt for a traditional truck like an F-150, says Edwards. If “refined, powerful, innovative” is more in line with your ego, then the electric truck may be more attractive. Strangely enough, the latest survey found that both Rivian RT1 and Ford F-150 Lightning owners mentioned a big reduction in range when towing but the RT1 owners were fine with it while the F-150 owners complained. Why? Different expectations: The Lightning is generally bought by “truck people,” says Edwards while Rivian’s customers are newer to the segment.
Lordstown is, in other words, trying to break into a segment of the autos market that is jealously guarded by Detroit, inherently tough and expensive to electrify, and with a complex relationship with the customer. Lordstown’s strategy for dealing with this was to focus on serving commercial fleets. In theory, fleet owners would be less concerned with bells and whistles and maybe range, too, since their drivers tend to operate within a certain radius. Since commercial fleet sales add up to only a few hundred thousand pickups a year, out of 2.5 million overall, and at a generally lower price point, perhaps that might also fly under Detroit’s radar to some degree.
The latter appears a non-starter, as epitomized by Ford’s reorganization that includes a separate, and seemingly highly profitable, commercial fleet arm, Ford Pro. Moreover, fleet owners, along with pickup drivers who do use them to haul stuff around, value the backing of an established brand with a large maintenance network. Lordstown, brand new and perennially requiring capital infusions, did not exactly reek of, to borrow the term, endurance. The pickup’s design incorporating four in-wheel motors, while innovative and supposed to reduce maintenance, was also … innovative, with all the risk that comes with that. At a starting price north of $60,000 but with a range of only about 200 miles, Lordstown was asking a lot of a purchasing manager to switch away from a similarly-priced F-150 running on gasoline.
The Endurance — a name that seems almost a taunt at this point — is a tough sell to fleet or business owners who prize trusted brands but also a tough sell to people who just want a cool electric truck and the dream of off-roading. It hasn’t found a clear lane. Lordstown isn’t unique in this respect, just far weaker than its competitors.
Rivian, which is very much going for the cool, electrified off-roader, has a better vehicle but, more importantly, a contract to build delivery vans for Amazon.com Inc., which is also the company’s largest shareholder. Even with that backing, Rivian’s market cap has collapsed to less than $14 billion from a peak of $153 billion. Ford is doing well with the F-150 Lightning, capitalizing on the brand and touting features like being able to power your home in a blackout. Even so, Ford had sold only about 20,000 of them in total by the end of the first quarter (compared with more than 663,000 other F-Series trucks over the same period).
As for that other hotly anticipated pickup, Tesla’s Cybertruck, it is debatable how applicable the term “pickup” really is for this vehicle. While it does sport a flatbed, its unique styling means you probably won’t see too many of them tooling around the local construction site — maybe not many period. When they arrive that is. Tesla unveiled the Cybertruck — complete with faulty “armor glass” — almost four years ago. Deliveries are scheduled to begin later this year, and they sure won’t be selling for the $40,000 figure Tesla touted back in 2019.
While Lordstown’s woes are of little consequence to the broader industry, the context is. Building an affordable — and profitable — electric truck for the truck-obsessed masses is extraordinarily hard. There is, at a philosophical level, a stark divide between the existing truck culture of power and excess and the threads of efficiency and conservation that run through the energy transition.
In bridging that, reducing the cost gap is a base requirement: The average truck buyer’s pre-tax household income is $117,000 while for an electric version, it is $161,000, according to Strategic Vision. Ford’s intention to scale up production of electric vehicles rapidly is the standard route to this, but the price war with Tesla earlier this year shows sticking to that will be tough. The incumbent auto manufacturers are struggling with the transition to electric vehicles overall, trying to maintain sales of profitable gasoline-burning vehicles — especially high-margin trucks and SUVs — for as long as possible. This week’s sharply-worded call from an industry lobbying organization to scale back the Environmental Protection Agency’s new EV-focused tailpipe standards speaks to the dilemma they face.
Above all, plugging in pickups will require somehow making an electric truck at least as compelling as its traditional counterparts, if not more so. When Tesla released the Model S sedan, it succeeded not so much because it was an electric car; more that it was a car made better by being electric. Replicating that feat for trucks remains an industry-wide challenge, whatever Lordstown’s ultimate fate.
1Sales reported as of the end of February 2023. Cash burn is cash used in operations less net capital expenditure since the beginning of 2019 (Source: Bloomberg).
A message from Advisor Perspectives and VettaFi: To learn more on this and other topics, check out our full schedule of upcoming CE-approved virtual events.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Liam Denning
