- General
- October 1, 2021
- 5 minutes read
EVs: Lordstown Sells Ohio Factory To Foxconn For $230M
Lordstown Motors (NASDAQ: RIDE), an embattled electric car startup, has struck a deal to sell its only automotive factory to…
Lordstown Motors (NASDAQ: RIDE), an embattled electric car startup, has struck a deal to sell its only automotive factory to Foxconn, the Taiwanese manufacturing giant famously known for assembling Apple’s iPhones. Foxconn will pay $230mn for the factory and then invest $50mn in Lordstown to support the EV startup’s operations.
- The factory of concern, located in Ohio, was a former facility of automaker General Motors that Lordstown bought after it closed down. Notably, GM lent Lordstown $40mn that the fledgling startup used to take the factory off its hands.
- The Ohio factory was the essential ingredient in Lordstown’s operations as it set out to woo investors for capital with a lofty goal of mass-producing electric trucks. Lordstown succeeded in raising capital, in fact, nearly $700mn from a SPAC merger, but later hit a wall. Soon after the merger, it warned of insufficient capital to fund commercial production and stirred a crisis.
- After warning of insufficient capital, Lordstown has resorted to urgent means to raise funding, and selling its factory to Foxconn appears to be that. As per their agreement, the startup will now lease factory space from Foxconn to assemble cars rather than own the facility outright, saving money in the short term.
- Before this deal, Lordstown also secured an urgent $400mn funding commitment from a hedge fund. Hence, it appears the startup hasn’t given up hopes of getting into commercial production despite its woes.
Lordstown’s problems led to the ouster of much of its founding executive team, including CEO Steve Burns. He’s been replaced by Daniel Ninivaggi, who was formerly the co-CEO of Federal-Mogul, a motor parts supply giant.
- For Foxconn, the deal gives the Taiwanese company its first automotive factory to kickstart its third-party vehicle manufacturer plans. The company has struck a deal to make cars for Fisker Inc, an American electric car startup, and said the Ohio factory is a viable location for that.
- Also, Foxconn said it’ll explore licensing arrangements for future manufacturing programs with Lordstown, though it’s uncertain if that’ll pan out.
Lordstown stock (NASDAQ: RIDE) currently trades for about $8, down from a peak of $31.57. Its current market value stands at $1.4bn, slightly down from $1.6bn when it made its market debut.
