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Lordstown Motors Corp. agreed to partner with Foxconn Technology Group in a $280 million deal that has the startup selling its former General Motors Co. factory in Ohio to the Taiwanese company in exchange for cash and an equity investment.
Under terms of the transaction, Lordstown Motors will sell the Lordstown factory to Foxconn for $230 million after buying it from GM for just $20 million. The maker of Apple’s iPhone will buy $50 million worth of common stock in its new partner and plans to assemble its Endurance electric pickup truck. The deal is contingent on the two sides reaching an agreement on manufacturing the pickup.
Lordstown shares jumped 9% in late New York trading Sept. 30. During regular trading hours, the stock rose 8.4%, closing at $7.98. It’s still down 60% for the year.
The deal gives both companies something they badly need. Lordstown Motors gets a partner that will hasten the startup’s move into large-scale production — a move that will help lower the high costs required to make EVs. Foxconn gets a plant in North America where it can build its open-source electric vehicle platform and do contract manufacturing for partners like Fisker Inc.
“It’s less about a facility sale than a strategic partnership,” Lordstown Motors Chief Executive Officer Dan Ninivaggi said in an interview. “You have to find a way to get scale in the auto industry. Foxconn has a vision. They’ve got enormous capabilities in manufacturing and they will be able to fill that plant faster than we could.”
The two companies are working on a manufacturing deal that would agree to a certain cost basis for the Endurance pickup. Lordstown Motors would pay a fee on top of that, Ninivaggi said. Foxconn will make the $50 million equity investment immediately regardless of what happens with talks for an assembly partnership.
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Lordstown is racing to get its Endurance pickup into production early next year. Even if the truck is well-received by customers, the company won’t fully utilize its Ohio factory anytime soon. So selling the facility and operating in parallel with Foxconn could help the company better leverage the plant where GM employed 10,000 people at its peak.
The company ousted Steve Burns, its founder and chief executive officer, in June over misstatements he made about Endurance orders. The company has repeatedly warned that its status as a going concern is in doubt less than a year after merging with a special purpose acquisition company, or SPAC, to go public.
Burns’ successor, Ninivaggi, said in an interview last month that he was looking for partners to help the company take full advantage of a plant that was once the Mahoning Valley’s biggest industrial employer. He added he was exploring all options to raise money.
Lordstown Motors has been under investigations by the U.S. Securities and Exchange Commission and the Justice Department after an internal probe concluded that prior management made inaccurate statements about pre-orders for the Endurance. The company is pushing to start deliveries of the pickup next year.
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