 This is MXUX. I just want to make a quick video here, hopefully a quick video on the Lordstown Q3 orange call we just had. I'm going to focus this on what I think shareholders would be interested in and I'm going to go through some key points here and come to a conclusion. I'm not going to do a lot of financial analysis. I'm going to focus in on just certain aspects of the call. This is kind of a gut reaction to the call and a overall analysis and again this is focused on stockholders. Let's just get started. Elon Musk recently commented on Rivian reaching mass production and break even cash flows of the true test. Scaling production and supply chain is key and let's get into how that relates and I think this is all very true. This is so true and let's see how that relates to the Q3 call from Lordstown Motors. The Foxconn purchase and contract manufacturing agreement should solve the problems of scaling and production and supply chain. Foxconn is an expert in this. They have a lot of weight in the world and they have a lot of capital and they want to make this work. So I think by Lordstown turning over the reins of production that this meets you know half of what reaching mass production scaling production and supply chain. If Foxconn can't do it no one can do it. You know break even positive cash flow is the question that LMC has to answer now. There's a lot of there's a lot of positives here. First of all the loss was lower by five cents than I mean the loss was less by five cents than projected. I think it was 54 instead of 59 percent cents per share for the quarter. So even with everything that's going on Lordstown is still operating efficiently or lowering their loss per quarter. Anyway let's just get back to this. The variable manufacturing rates via contract manufacturing with Foxconn is going to lower operating expenses for Lordstown. It's going to enable them to ramp up and ramp down and not have to keep the expenses going in between those periods. It's going to allow them to control the amount of ramp but you know they could wait until they have confirmed orders to build the trucks. It's going to operate very much like the Tesla model only having a third party involved with the manufacturer and I think this is a great move for Lordstown and it's going to lower operating expenses. They're going to be able to focus those expenses on periods when they have demand and so forth and it's going to allow them to ramp up. The contract manufacturing is going to I Lordstown now has 600 people on staff there. I think it's going to lower this. I think a lot of those people are going to go over to Foxconn and it's also going to stabilize the LMC employee headcount. The manufacturing employees are going to be replaced by marketing and you know sales administration employees I would imagine. So this is another lower operating expense for Lordstown. So overall the sale of the plant lowers operating expenses for Lordstown. Also now I don't have the numbers on this but I'm just going with what I know to feel to be true is the R&D costs are slowing and diminishing. Right now Lordstown is basically where Rivian is and Rivian has made 100 vehicles. They sold they're all gone to employees. They're probably I don't know they're not saying but they're probably PPV vehicles. Lordstown has produced basically the same amount of PPV vehicles for testing of airbags and so forth. So Lordstown is really kind of on par with Rivian. I mean not cash wise but certainly production wise. So we're at the point where the R&D costs are diminishing for Lordstown and they are basically set up. I mean once they get certified and their their hub production line is certified which I am not sure exactly what that means. I don't know if it's certified I don't know if that's the right term but in any case soon as that's ready to go and they are producing hub voters for these 100 vehicles at the plant they're they're all ready to go. Okay so they don't have a lot of R&D left to go. So what do what do they have? They have a selling administration in general expense is an issue and this is this is one of the problems that's been nagging them and draining bleeding cash off of them and part of this involves the response to the SEC slash DOJ investigation. I am sure they have to have a law firm on retainer and this is X amount of dollars a month and whatever other expenses they have to meet demands from these two government agencies. This is draining precious cash from Lordstown. It's really the one thing they can't control they've been very efficient with their cash you know the application of their capital but this is just it just doesn't want to end and this is a problem okay and this is this is the main problem I see is this this this this sag here is you know it's it's an issue I can't get that to highlight well anyway the point is um they have a problem with uh the legal expenses they're facing. The CAPEX the fund contract manufacturing is an issue now they have moved the manufacturing to Foxconn but they still have to pay to have the vehicle produced and the Foxconn I imagine is going to supply all the parts and everything but there's going to be a bill of materials and also a fee to Foxconn for building the the vehicle and then they're going to take their margin over top of that so they have to have CAPEX to fund the the manufacturing uh that's an issue so we got this right here this sag the legal the CAPEX to fund uh and and it's always a problem with the startup uh is an issue and also the delay in startup production is an issue I I actually uh expected a delay in production now if we have a and you know let me just explain this well for example I was reading that the the brake system chips the the circuit board that that powers the the braking the automatic braking the safety braking the for vehicles for GM vehicles and every other vehicle has chips in it that are in short supply and this is causing a bottleneck so this this along with other issues are uh are delaying it in any case you know to expect a delay is to expect a delay I think we have another delay after this that that is going to be a problem this delay I expected you know there was set for September I think this is why Rivian rushed their uh launch I don't think they were actually ready to launch I think they did it to beat Lordstown and then it was moved to April next year and now it's been moved back again but you know they're using the GM parts catalog and GM is expected it has delays and they're using the same parts and they're having delays so this is to be expected um on the positive side you know per previous analysis the first two years of production are sold Schmidt who left I'm I really would like to know what went on there but the point is he is redundant now that Foxconn is taken over Foxconn probably has their own people and he might have wanted to leave uh you know he has other interests and he's had a major accomplishment here maybe he wanted to move on and um anyway it's irrelevant but as he said the first two years of production are sold so that's basically where we are um now let's just talk about the the general market of uh for the endurance my previous analysis shows the endurance is a better fleet truck than the lightning it is it just is and it's also a better work truck it's the only electric work truck out there it has no competition for people that actually want to haul stuff you got these you know country club pickups these grocery getters like the Rivian with you know a tent that looks like something you'd buy your 10-year-old daughter to put in the backyard and a $5,000 camping kitchen that has a $90 electric hot plate in it give me a break anyway looks like a Honda Ridgeline it's not a work pickup but anyway the endurance is a better fleet truck than the lightning as well you know the lightning I'm not going to go through the analysis over and over again but there's a weight problem there's a charging problem there's a hauling problem uh the the diminished load it can handle the strict weight requirements of the bed so on and so forth not coming in until you can watch my previous videos so let's just move on here issue the new EV incentives favor Ford making it makes the enhanced longer-range lightning equivalent uh fleet truck uh it's equivalent to the endurance and price and this is the one with the bigger battery so that's an issue but again I think the endurance is a much more effective vehicle than that vehicle it's lighter it's more efficient its energy use its capabilities are better its suspension is better even with the incentives I think it's a better truck and I'll go through this later uh delay in the start of production should put Ford LMC a launch in the same time frame this is unfortunate this is what Ford is planning uh Lord Sound Motor should come out at exactly the same time it's going to be overwhelmed by press on Ford but we're not going to the overall market we're going to the fleet market and they've already been working on selling the fleets for a long time um so let me just go through what I think about these two issues fleet owners calculate carefully uh the endurance is still a better fleet vehicle with lower cost of ownership uh the complexity and the charging demands and the weight of the Ford lightning especially the enhanced longer range fleet model um make the the endurance I mean these fleet guys they have spreadsheets I don't know in my opinion the endurance is still a better truck even with the price equivalency absolutely issue will Ford Fleet LV EV sell at manufacturers suggested retail price others have not it's a definite dealer markup over Ford MSRP now on every model could this heat up the entire cost advantage for Ford here's the thing I don't know what percentage of uh Ford fleet sales are direct sales or which ones go through fleet management companies or dealerships or fleet dealers I don't know what their model is this is something I'm going to be looking into but and I've mentioned it here uh what percentage of Ford fleets will be direct to country direct to customer uh LMC will be 100 direct to customer fleet sales but if they have any kind of middleman Ford I mean there's a video I was watching and I think I have it listed in my playlist for Lordstown Motors of a guy who went to buy a new Bronco negotiated the price went to pick it up and the dealer told him oh I'm sorry it's going to be an extra $10,000 and you know this is like a $40,000 vehicle they were asking for a 20 25% dealer markup and the guy negotiated down to $9,000 and he thought he got a deal I think this is going to happen with the fleet trucks too anything that's going through a third party that's not coming from Ford they're going to mark it up and I think this could eat up the entire entire EV credit supplied by the government um so again uh what percentage of Ford fleet sales would be direct to customer sales and LMC is going to be 100% direct to customer fleet sales so uh if there's a middleman involved with Ford I mean that's forget it you know it's going to be they're going to be marking up those trucks uh LMC may have an advantage with direct sales in a one price model you know if Ford has indirect sales indirect sales or even a percentage of the Ford sales or indirect sales they're going to be marking them things up this is something to think about this is something that needs to be looked into you know what percentage what percentage of the sales is direct to customer sales but anyway I think uh Lord's Time Motors actually has an advantage here uh so anyway after going through these issues with the main competition which seems to be Ford um you know the issues I think things are moot with the Ford fleet sales I mean there's going to be a percentage of people that are going to be loyal to Ford or whatever but any thinking fleet manager is going to go with the endurance I think a lot of them have already made their decisions or at least are buying test fleets for the endurance it is a better fleet truck actually a better electric vehicle a better pickup truck all the way around more efficient than more efficient use of energy than Tesla okay anyway just look at the sides of the battery in the range anyway so uh the conclusion I have now is the issues facing Lord's Time Motors are all essentially financial there there's they're ready to go they're testing they're going to get certified they have to certify that there's these are all minor details everything's ready to go uh as far as the product goes okay will will Lord's Time Motors have enough cash to start production uh will Lord's Time Motors have to raise more capital I think the answer here is probably yes uh I had mentioned in my last video that uh you should pull up your socks and get ready for a capital race because it's going to become it um LMC has a has no debt it's got a clean balance sheet strong balance sheet as far as that goes you know they can borrow they can issue bonds uh you know uh Tesla issued convertible bonds uh Amos Lalo Lalo Pete upon whatever his name is uh he bought a ton of them and the bonds were at a certain strike price or they could be converted to stock I think that's something Lord's Time should look into uh it makes sense uh and it won't dilute uh stock holders right away and the bond holders would be protected from any default uh that's something uh can LMC go to a stock sale to raise capital maybe uh institutional buyers I don't know about the public buyers everybody's in the public it has been holding a long time I don't know if they're gonna go for more but anyway and we also have the uh AP stock credit line to raise capital okay now they've they've raised the capital from the sale of the plant and the stock sale of 50 million to uh Lordstown from Foxconn along with the 230 million uh of the deal which is being parsed out in uh you know 100 million dollar segments and then uh so forth but uh this is this is a strong capital raise but you know these car companies they always they always need 500 million dollars so that's 300 million go figure um anyway they can they can use that AP credit line to raise capital this is going to dilute stock holders too I I think this convertible bond issue you know if they if they could pull that off I think that would be the way to go in my opinion anyway uh and this is my conclusion the main and perhaps the only issue facing the LMC is cash it it's unlikely they can cut expenses that they have been very efficient and very good stewards of their capital stewards of their capital they don't have a lot of waste a lot of fat to trim uh they sold their major assets so there isn't much left much left to sell I don't think there's anything left to sell and uh so that's not an option uh so the balance sheet analysis is very important going forward um I have not looked at the figures from this call course their loss is narrowing each quarter they've gotten it down five cents a share again there aren't d expenses or or following the SAG expenses because of this legal thing are a problem uh the sales expenses are probably going to go up after production starts but but they but cash is critical okay and it's so obvious I mean I don't even have to say it now we have the possible uh federal ev loan program award here now I've been doubtful about this in the past because uh the federal government is always favored for on these and they have actually given lesser manufacturers the the short end of the stick let's put it that way Foxconn is joining them on their loan applications I did a short video on this this could make a difference um they can see a way of getting paid back with Foxconn doing the manufacturing that this is a possibility I think the possibility of this has gone up I was didn't even mention it in a lot of videos because I thought it was just too far out there now with Foxconn on the loan application with Lord's time motors uh you know that's that's a key so the key is the cash burn rate versus the cash on hand again there's a lot of efficiencies coming from this sale and lower head count we still have this burn rate with this DOJ and SEC investigation a problem it's bleeding capital um I don't know how we can make that uh go away but anyway so we're gonna have to most likely do some kind of credit raise uh capital raise like I say I would go with convertible bonds on favorable turns for the buyers um you know the cash burn rate versus the cash on hand is the question all Wardstown has to do internally besides production is get these models certified and they already haven't built and you know they're they're you know all the way there on manufacturing I mean all they got to do is start really get these certifications and start manufacturing I mean I think the parts parts uh issue is holding them back obviously and I think they may be dragging their feet on certification because why spend the money when you know you can't get the parts to do the production anyway anyway uh so what what this comes down to I think the last thing that uh Lordstown has any variance in and any influence in what will the contract manufacturing agreement with Foxconn be um will Foxconn give them favorable terms terms uh will Foxconn finance their production costs uh based on uh sales guaranteed that you know the financing on their on their sales you know saying uh so let's say Lordstown goes to Foxconn says look we got an order book with this many orders in it uh loan us the money to do the production based on these orders and we'll pay you back when we sell the vehicles will Foxconn do that I don't know how much will Foxconn charge to manufacture each vehicle this is all to be negotiated this has not been spoken of by either party