Electric Vehicle Start-Up Cuts Outlook as Funding Runs Low: Live Updates
Here’s what you need to know:
Lordstown Motors halves the number of vehicles it will make in 2021.
Here’s what’s happening in markets today.
A pandemic pet boom leads to a pandemic vet boom.
With state budgets flush, President Biden is under pressure to repurpose pandemic relief funds.
Cannabis companies are rushing to meet the demand of legal weed in New York and New Jersey.
Lordstown’s biggest selling point to investors was that it had thousands of pre-orders for its truck, the Endurance.Credit…Megan Jelinger/Agence France-Presse — Getty Images
Shares of Lordstown Motors, a start-up aiming to make electric pickup trucks, dropped 13 percent in premarket trading on Tuesday after the company said that it would “at best” make just 50 percent of the vehicles it had previously hoped to this year, unless it is able to raise additional capital.
“What we are saying is that if we don’t get any funding, we might only make half of what we thought,” Lordstown’s chief executive, Steve Burns, said Monday during a conference call.
Mr. Burns said the company was still on track to begin making trucks by September.
Lordstown has had discussions with some strategic investors who could pump money into the company, he said, and it has looked into borrowing money by using its plant or other assets as collateral.
He also said the company was looking into borrowing from a federal government program meant to support the development of electric vehicles, but it was unclear if it had any funds left.
Lordstown would be able to make as many as 2,200 trucks by the end of the year if it gets funding, Mr. Burns said. Without additional capital, it would probably make fewer than 1,000.
Mr. Burns has been hoping Lordstown would be the first to produce an electric pickup truck aimed at commercial fleets such as large construction and mining companies, but it will soon face some formidable competition. Ford Motor last week unveiled an electric version of its F-150 pickup that is supposed to go on sale next spring.
Lordstown gained attention because it bought an auto plant in Lordstown, Ohio, that General Motors had closed. It was also once hailed by former President Donald J. Trump for saving manufacturing jobs.
It became a publicly traded company last year by merging with a special purpose acquisition vehicle, a company set up with cash from investors and a stock listing. Several other electric vehicle and related businesses have gone public through similar mergers in recent months, taking advantage of investors’ desire to find the next Tesla.
Lordstown, which is being investigated by the Securities and Exchange Commission, said it lost $125 million in the first quarter of 2021, but ended the period with $587 million in cash.
A Ryanair jet, which was diverted to Minsk, the capital of Belarus, leading airlines to suspend flights through Belarus airspace.Credit…Andrius Sytas/Reuters
More airlines responded on Tuesday to the brazen decision over the weekend by Belarus’s president to force a commercial flight to land in an effort to arrest a dissident journalist.
Fallout was swift as the country’s strongman president, Aleksandr G. Lukashenko, drew reprimands and flight bans from countries and airlines around the world.
The European Union on Monday called on airlines based in the bloc to stop flying over Belarus as it also worked to ban the country’s airlines from flying over E.U. airspace. Britain imposed similar restrictions, while several major airlines said they would stop traversing the country altogether, effectively severing Belarus’s direct air connections to Western Europe.
Here’s the latest response from airlines on Tuesday:
Air France and KLM later said they too would suspend flights going through Belarus airspace, Reuters reported.
Finnair said it would do the same. “The change will make flight time a bit longer,” the Finnish national carrier said on Twitter.
“Due to the current dynamic situation, we are suspending the operation in Belarusian airspace for the time being,” Tal Muscal, a spokesman for Lufthansa, said Monday in a statement.
The German airline was joined by Austrian Airlines in stopping flights over Belarus.
Though not a major European hub, Belarus’s capital, Minsk, is served by several international airlines, including Lufthansa, Austrian Airlines and Turkish Airlines. U.S. airlines like American Airlines, Delta Air Lines and United Airlines offer flights to Minsk through partnerships with European carriers and Belavia, the Belarusian airline.
Stocks continued an upswing on Tuesday. The S&P 500 rose 0.3 percent in early trading, following strength in Asian markets and growing confidence in a European economic recovery.
The Stoxx Europe 600 index rose 0.3 percent, the fourth-straight day of increases. The Hang Seng in Hong Kong closed 1.8 percent higher and the CSI 300 in China rose 3.2 percent, the biggest one-day increase since July.
Elsewhere in markets
After a turbulent weekend, the price of a Bitcoin was above $37,000 on Tuesday morning. The cryptocurrency had dropped as low as about $31,000. Ray Dalio, the founder of hedge fund Bridgewater Associates, said Bitcoin’s “greatest risk is its success.” Speaking at a CoinDesk conference in a video released on Monday, Mr. Dalio said that as Bitcoin becomes a “bigger deal and more of a threat,” it could become an existential risk to other financial markets and governments unable to control it. He added he’d rather own Bitcoin than government bonds.
Lordstown Motors, the start-up aiming to make electric pickup trucks, dropped more than 14 percent after it said on Monday that it would “at best” make half of the vehicles it had hoped to this year, unless it is able to raise additional capital.
An improving outlook for the German economy is taking hold. A survey of German business managers on their expectations for the economy over the next six months showed increasing optimism in May, with the ifo Institute’s index rising to 102.9 points, the highest since 2011. Separately, the national statistics office confirmed that gross domestic product fell 1.8 percent in the first quarter, a period during which Germany was in different degrees of lockdown, compared with the previous quarter.
Mushroom, a poodle, getting examined at Modern Animal. Morgan Stanley projected that pet care would be a $275 billion industry in 2030.Credit…Rozette Rago for The New York Times
More than 12.6 million households adopted animals from March to December of last year, according to the American Pet Products Association, helping to propel an increase in visits and revenue to veterinary offices, as new owners took pets in for their first checkup.
The heightened demand for veterinary services has drawn investors and others to the market, reports Jane Margolies for The New York Times. Landlords — who might previously have spurned tenants associated with unpleasant odors and noise — are more amenable to leasing to the clinics after a year when the vets paid their rent while other businesses fell behind. And architecture firms that specialize in the design of vet space are busier than ever.
Tech-savvy start-ups are promising a reinvention of the experience, with phone apps, round-the-clock telemedicine and boutique storefronts where refreshments (for pet owners) run to LaCroix and cold brew.
In New York, Small Door Veterinary recently announced it had raised $20 million and planned to go from a single location to 25 by 2025. Bond Vet, another New York start-up, models itself on CityMD clinics; it recently raised $17 million and now has six offices.
And in Los Angeles, another membership-based company, Modern Animal, has an office in a high-end shopping district in West Hollywood, with three more to come in the city by year’s end and a dozen clinics in California by 2022, said the company’s founder and chief executive, Steven Eidelman.
The pet care business is riding a growth spurt: Morgan Stanley projected that it would be a $275 billion industry in 2030, up from $100 billion in 2019, with vet care the fastest-growing segment over the next decade.
“Ten years ago, there was a baby boom,” Arash Danialifar, chief executive of GD Realty Group, a California company that has leased space to a veterinary start-up, said about the proliferation of shops selling children’s fashion. “Now it’s all about pets.”
President Biden is under pressure to redirect assistance for state, local and tribal governments to instead pay for parts of a potential bipartisan agreement on upgrading the United States’ infrastructure.Credit…Stefani Reynolds for The New York Times
President Biden and congressional Democrats went to the mat this winter to secure $350 billion in assistance for state and local governments in their $1.9 trillion stimulus package. The aid was meant to help them rehire laid off government workers, invest in infrastructure projects and repair balance sheets damaged by the pandemic.
But it increasingly looks like many states — especially ones run by Democrats, with relatively high taxes on high earners — don’t need the money. California officials expect a $15 billion surplus this fiscal year. Virginia has seen nearly $2 billion in unanticipated revenues. In Oregon, economists recently upgraded the state’s revenue forecasts, moving the state from projected deficits to surplus.
The tax revenues are coming from a rebounding economy and soaring stock market, and raising pressure on Mr. Biden to repurpose hundreds of billions of dollars of federal spending approved earlier this year, The New York Times’s Jim Tankersley and Alan Rappeport report.
Republicans in Congress have urged Mr. Biden to redirect assistance for state, local and tribal governments to instead pay for roads, bridges and other portions of a potential bipartisan agreement on upgrading America’s infrastructure. Some economists and budget experts support that push. White House officials haven’t said whether they would be willing to redirect that spending, mindful that some states, like tourism-dependent Hawaii, still face large budget shortfalls.
“Popular products run out and prices are still higher than we’d like to see them,” said Jeff Brown, executive director of New Jersey’s Cannabis Regulatory Commission.Credit…Mohamed Sadek for The New York Times
The advent of legalized adult-use marijuana in New York and New Jersey is an entrepreneur’s dream, with some estimating that the potential market in the densely populated region will soar to more than $6 billion within five years.
But the rush to get plants into soil in factory-style production facilities underscores another fundamental reality in the New York metropolitan region: There are already shortages of legal marijuana, The New York Times’s Tracey Tully reports.
Within New Jersey’s decade-old medical marijuana market, the supply of dried cannabis flower, the most potent part of a female plant, has rarely met the demand, according to industry lobbyists and state officials. At the start of the pandemic, as demand exploded, it grew even more scarce, patients and business owners said.
The supply gap has narrowed as the statewide inventory of flower and products made from a plant’s extracted oils more than doubled between March of last year and this spring. Still, patients and owners say dispensaries often sell out of popular strains.
Because marijuana is illegal under federal law and cannot be transported across state lines, marijuana products sold in each state must also be grown and manufactured there.
Federal banking law also makes it nearly impossible for cannabis-related businesses to obtain conventional financing, creating a high hurdle for small start-ups and a built-in advantage for multistate and international companies with deep pockets.
Oregon, which issued thousands of cultivation licenses after legalizing marijuana six years ago, has an overabundance of cannabis. But many of the other 16 states where nonmedical marijuana is now legal have faced supply constraints similar to those in New York and New Jersey as production slowly scaled up to meet demand.
After years of hype, billions of dollars of investments and promises that people would be commuting to work in self-driving cars by now, the pursuit of autonomous cars is undergoing a reset.
Expectations are that tech and auto giants could still toil for years on their projects. Each will spend an additional $6 billion to $10 billion before the technology becomes commonplace — sometime around the end of the decade, according to estimates from Pitchbook, a research firm that tracks financial activity. But even that prediction might be overly optimistic, The New York Times’s Cade Metz reports.
So what went wrong? Some researchers would say nothing — that’s how science works. You can’t entirely predict what will happen in an experiment. The self-driving car project just happened to be one of the most hyped technology experiments of this century, occurring on streets all over the country and run by some of its most prominent companies.
Companies like Uber and Lyft, worried about blowing through their cash in pursuit of autonomous technology, have tapped out. Only the most deep pocketed outfits like Waymo, which is a subsidiary of Google’s parent company, Alphabet; auto industry giants; and a handful of start-ups are managing to stay in the game
Late last month, Lyft sold its autonomous vehicle unit to a Toyota subsidiary called Woven Planet in a deal valued at $550 million. Uber offloaded its autonomous vehicle unit to another competitor in December. And three prominent self-driving start-ups have sold themselves to companies with much bigger budgets over the past year.