Foxconn becomes the largest shareholder of Lordstown Motors with an investment of up to 170 million USD

Lordstown Motors Corp has agreed a deal under which a subsidiary of Foxconn will invest up to $170 million in the electric vehicle (EV) maker, making the Taiwanese contract manufacturer the largest shareholder with nearly 20% shares.

Foxconn Ventures Pte Ltd will purchase 12.9 million shares on or after November 22 and an additional 26 million shares will bring Foxconn’s holdings to 18.3% of Lordstown’s common stock and all preferred shares. its share, surpassing founder Stephen Burn’s 17.2% stake, according to Refinitiv.

Lordstown will use the proceeds from the share sale to fund development and design activities for a new electric vehicle program in partnership with Foxconn, canceling its previous joint venture contract with the manufacturer, It said in a filing, sending shares rose 7% to $2.06 in extended trading on Monday.

Foxconn said the deal will deepen Lordstown’s relationship with Foxconn’s EV development platform, MIH, or Mobility in Harmony.

“In the future, there will be opportunities to share LMC’s technical resources with other customers, further expanding the MIH EV ecosystem and allowing customers to choose better and competitive solutions,” said Foxconn. more competitive”.

In other words, the startup reported a net loss of $154.4 million for the quarter ended September 30, wider than a loss of $95.8 million, a year earlier.

While the demand for tram has surged globally, supply chain disruptions and rising raw material costs have made it difficult for companies to raise output and meet hot demand.

Foxconn began manufacturing Lordstown’s Endurance pickup trucks in September after buying the US company’s Ohio facility. The deal was driven by the need to raise the money needed to start production of Endurance.

Lordstown is expected to limit Endurance production until 2023 or so to minimize losses, until they can cut the cost of materials.

Lordstown said Monday that the cost of materials to build the Endurance electric pickup truck is higher than its intended selling price, adding that it won’t see a positive gross margin until the cost reduced raw material costs.