Lordstown Motors on Monday warned that Taiwan’s Foxconn may be looking to pull out of a key funding deal that keeps the electric truck maker afloat, and that it could go bankrupt if matters don’t go away. be solved.
in one regulatory records first reported by CNBC, Lordstown said it received a letter from Foxconn on April 21 alleging that the future truck maker had breached a funding agreement because its stock had fallen below $1 a share. for 30 consecutive trading days, leading to a delisting notice from NASDAQ (stock was trading at 30 cents on Monday). Lordstown reports that the companies are still in negotiations.
Set up to take over a former General Motors plant in the Ohio town of the same name to build electric trucks, Lordstown sold the plant to its Taiwanese manufacturer Foxconn last year. After that deal closed in May 2022, the two companies agreed to a second deal in which Foxconn would invest up to $170 million in Lordstown, which CNBC calculates as a 19.3% stake. of US companies.
Lordstown endurance
Foxconn paid the first $52.7 million due under a funding agreement last year, but has not yet made additional payments, according to CNBC. Under the terms of the deal, Foxconn is expected to invest an additional $47.3 million within 10 days of regulatory approval by the Committee on Foreign Investment in the United States. Lordstown told CNBC that approval was granted on April 25, meaning Foxconn is obligated to disburse by May 8.
Foxconn is perhaps best known as a contract manufacturer for Apple’s iPhones, but the company has recently been trying to expand into EV production. The Lordstown case got off to a bad start.
Last year, when it took over the factory and production, Foxconn said the Lordstown Endurance pickup truck would be handover after 2022. It soon became apparent that Lordstown still didn’t have enough cash to produce more than one recommend a few hundred trucks, if it is due to lack of mass production equipment. Since then, the factory has produced about 30 trucks, but production has effectively stalled.
Lordstown endurance
In its fourth-quarter 2022 financial results, Lordstown said it will shift its focus from Endurance to new EVs capable of using parts sourced from Foxconn and potentially built at the same factory in Ohio. . Lordstown and Foxconn have agreed to finalize a plan to jointly develop a new EV by May 7, after which Foxconn will invest an additional $70 million, but that plan has yet to be finalized, CNBC reported.
Foxconn meanwhile has been Rotate to create your own electric carincluding some under the new Foxtron brand may not be for the US. The company also has manufacturing contracts with other auto startups, including construction plans $29,900 Fisker Pear EV at the same old Lordstown factory in Ohio.
