Lordstown announced that it has agreed to sell its Ohio factory to Chinese manufacturing giant Foxconn in the hope that it can help the startup build its electric pickup truck.
The company was founded out of a deal to take over GM’s Lordstown factory for $20 million just a few years ago, and it plans to bring an electric pickup truck, the Lordstown Endurance, to production this year.
We previously stated that the timeline was extremely ambitious due to the fact that the factory needs to be completely retooled, and Lordstown is trying to bring to market the first passenger vehicle with in-wheel hub motors, which is an untested technology in pickup trucks.
Lordstown went public through a SPAC deal last year and saw its valuation soar to up to $4 billion.
The company saw its stock price increase on several announcements, including the fact that they secured over 100,000 orders for their Endurance pickup truck.
However, things took a bad turn when those orders were exposed as exaggerated, and Lordstown’s first prototype caught on fire during its first drive.
The company has since been under increased pressure to deliver, and the chances for the Endurance to come to market this year have been going down fast.
Things appeared to be spiraling out of control when both CEO Steve Burns and CFO Julio Rodriguez have announced that they resigned earlier this summer.
Now Lordstown Motors is trying to right the ship by bringing in a partner: Foxconn, a giant manufacturing company better known as the manufacturer of Apple’s iPhone, but they have been trying to get into the electric car business as of late.
As part of the deal, Lordstown would be selling most of its factory to Foxconn for $230 million and them selling them $50 million worth of shares.
They are also negotiating a contract for Foxconn to help Lordstown manufacture their electric pickup truck.
Here are the main points of the deal:
- Lordstown Motors and Foxconn will use commercially reasonable best efforts to negotiate a definitive agreement pursuant to which Foxconn would purchase the Lordstown facility, excluding Lordstown Motors’ hub motor assembly line, battery module and packing line assets, certain intellectual property rights and other excluded assets, for $230 million.
- Both entities would also negotiate a contract manufacturing agreement, which would be a condition to closing of the facility purchase, whereby Foxconn would manufacture Lordstown Motors’ Endurance full-size pickup truck at its Lordstown facility. Lordstown Motors would also agree to provide Foxconn with certain rights with respect to future vehicle programs.
- Concurrently with the closing under the definitive agreements, Lordstown Motors would issue warrants to Foxconn that are exercisable until the third anniversary of the closing for 1.7 million shares of common stock at an exercise price of $10.50 per share.
- The parties have agreed to explore licensing arrangements for additional pickup truck programs.
- Following the closing under the definitive agreements, Lordstown Motors would enter into a long-term lease for a portion of the existing facility for its Ohio-based employees, and Foxconn would offer employment to agreed upon Lordstown operational and manufacturing employees.