Hope for Endurance: Lordstown Motors Selling Former GM Factory to Foxconn
While it seemed that the writing was on the way for Lordstown Motors for a while, it appears the company is selling the former GM plant to Foxconn. That is good news for the Lordstown Motors truck fans, and it seems it was good for the company stock. Will the Endurance electric truck make it to market after this?
Lordstown Motors might be able to produce the Endurance electric truck
The current Lordstown Motors plant used to belong to GM before the electric vehicle automaker took over. Lordstown plans to sell the factory to iPhone maker Foxconn for $230 million, CNBC reported Thursday. After the announcement, the company stock went up 21%. Lordstown has been trying to raise funds to continue attempting production for the Endurance electric truck.
Under the current agreement, Foxconn will assemble the Lordstown Motors Endurance truck in the facility. Foxconn, also known as Hon Hai Technology Group, will provide enough cash for the current plans. It will essentially give the company the jump-start it needs to get production rolling. In addition to the deal with Lordstown, Foxconn also has an agreement with Fisker to produce EVs later on.
Lordstown purchased the 6.2 million square feet facility in Lordstown, Ohio, back in 2019 from GM. GM owns about 7.5 million shares of Lordstown stock due to this agreement, which is equivalent to an equity value of $75 million in the company.
This is good news for Foxconn and Lordstown Motors
With the deal, Foxconn will purchase $50 million in Lordstown stock. The EV startup will enter into a long-term lease for part of the plant, and Foxconn would offer jobs to current Lordstown staff.
“The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and cost-efficient supply chain, while freeing up Lordstown Motors to focus on bringing the Endurance to market, developing service offerings for our fleet customers and designing and developing innovative new vehicle models.”Lordstown CEO Daniel Ninivaggi | CNBC
In addition to that, the agreement offers Foxconn a way to establish a factory in the U.S. It will also give Lordstown the much-needed cash flow to get the Endurance truck up and running.
Will the electric truck be able to turn things around?
In Lordstown’s production and financial update, the cash balance on hand was down to $210 to $240 million. “The Lordstown Motors team continues to move forward with its plan to build a limited number of vehicles for testing, validation, verification, and regulatory approvals during the balance of 2021 and the first part of 2022.”
Foxconn is known for iPhone production but has been aiming to get into different types of manufacturing, such as electric vehicles.
For now, it seems that Lordstown Motors might be able to move forward on the production of the highly-anticipated Endurance electric vehicle. Getting the public to rally behind the truck again will require a bit more work, though. The company is still under investigation by the Securities and Exchange Commission and Department of Justice for statements made by the former management, including the ex-CEO, Steve Burns.