Lordstown Motors to sell Ohio plant to Foxconn for $230 million

Lordstown Motors has entered into an in-theory settlement to sell its substantial assembly plant in Ohio to Iphone maker Foxconn for $230 million, the companies declared late Thursday.

Under the deal, the Taiwan-centered electronics contract company will assemble Lordstown Motors’ initial products, an all-electric pickup truck named the Stamina, that the firm was getting ready to make and promote beginning upcoming 12 months.

Selling the plant to Foxconn, also known as Hon Hai Technological innovation Team, will deliver cash for the income-strapped electric car or truck start out-up, though providing Foxconn a leap start out to developing EVs. Foxconn also has a deal with start off-up Fisker to generate EVs in the coming decades.

“The partnership would allow for Lordstown Motors to get gain of Foxconn’s extensive producing abilities and price-productive offer chain, though freeing up Lordstown Motors to focus on bringing the Endurance to sector, developing company offerings for our fleet customers and coming up with and establishing ground breaking new motor vehicle types,” Lordstown CEO Daniel Ninivaggi stated in a statement.

Bloomberg 1st claimed the corporations ended up “near an settlement” earlier in the working day, sending Lordstown shares up by as a lot as 21% on Thursday right before retreating to close at $7.98, up 8.4%. The inventory greater by a further 7.4% during following-hrs buying and selling.

Less than the proposed deal, Foxconn also will obtain about $50 million of Lordstown frequent inventory. The EV get started-up programs to then enter into a extended-expression lease for a portion of the previous Standard Motors plant, and Foxconn will present careers to Lordstown operational and production employees.

“In addition to reaching the objective of relocating in advance our timeline to set up electrical vehicle production capacity in North The usa, it also displays Foxconn’s flexibility in giving design and style and manufacturing providers for distinct EV consumers,” Younger Liu, chairman of Hon Hai Technology Group, claimed in a assertion.

Lordstown has been strapped for cash as it makes an attempt to start manufacturing of the Endurance. The corporation in June claimed there was “sizeable question” about its means to continue as a going concern in the upcoming year simply because of difficulties funding the output of the Endurance.

While Taiwan-based mostly electronics deal maker Foxconn is very best identified for Apple iphone generation, it is really making an attempt to broaden its production to electrical vehicles.

Employees install door hinges to the human body shell of a prototype Endurance electrical pickup truck on June 21, 2021 at Lordstown Motors’ assembly plant in Ohio.

Michael Wayland / CNBC

The EV start-up procured the 6.2 million square-foot significant facility in Lordstown, Ohio, in 2019 from Typical Motors, which ceased functions at the plant as element of a restructuring plan. The get started-up reportedly bought the facility for $20 million, a portion of its in general price, and GM has assisted the corporation both of those economically and operationally with suppliers.

GM owns 7.5 million shares of Lordstown Class A typical inventory. It received the shares in trade for fairness worth of $75 million in the EV company, most of which ended up in-kind solutions and connected to the sale of the house.

Aside from its economic problems, Lordstown is underneath investigation by the Securities and Exchange Fee and Section of Justice concerning its offer to go community as properly as perhaps wrong or misleading statements from previous administration, including firm founder and ex-CEO Steve Burns.

Burns and his CFO remaining the SPAC-backed firm in June just after an inside investigation uncovered “difficulties regarding the accuracy of selected statements” all-around Lordstown’s preorders, especially the seriousness of the orders and who was making them.

In May, quick seller Hindenburg Analysis said the firm misled buyers, together with utilizing “pretend” orders to raise funds for its Endurance electric pickup. The limited seller also stated the pickup was a long time away from creation. Lordstown has preserved it is on track to start off earning the motor vehicle in September.

Lordstown beforehand claimed the internal investigation discovered Hindenburg’s report “is, in substantial respects, phony and misleading.”