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The Lordstown Motors factory is where GM once operated, in Lordstown, Ohio on October 16, 2020.
Megan Jelinger | AFP | Getty Images
Lordstown Motors shares jumped 21% on Thursday following reports the ailing electric vehicle startup is “close to a deal” to sell its large Ohio plant to the iPhone maker Foxconn.
The companies are expected to announce the deal as early as Thursday later, according to Bloomberg News, which first reported on the talks.
Lordstown shares, which went public in October as part of a PSPC deal, hit $ 8.93 per share on Thursday before falling to $ 8 per share, up about 9%. The company is valued at $ 1.4 billion.
Lordstown is strapped for cash as he tries to start production of his first vehicle, a fully electric van called Endurance. The company said in June that there was “substantial doubt” about its ability to continue in business next year due to financing issues for Endurance production.
While the Taiwan-based electronics subcontractor is best known for iPhone production, it is trying to expand its manufacturing to electric vehicles. Most notably, the company earlier this year struck a deal with Fisker, another electric vehicle start-up that went public through a SPAC, for the production of electric vehicles.
The value of the reported deal between Lordstown and Foxconn is unknown at this time, according to Bloomberg. Spokesmen for Lordstown Motors and Foxconn did not immediately respond to comments or declined to comment.
The EV start-up bought the massive Lordstown, Ohio facility in 2019 from General Motors, which ceased operations at the plant as part of a restructuring plan. The startup reportedly bought the plant for $ 20 million, a fraction of its overall value, and GM has helped the company both financially and operationally with suppliers.
GM owns 7.5 million Class A common shares. It received the shares in exchange for a net worth of $ 75 million in Lordstown Motors, most of which were in-kind services and related to the sale of the property.
Workers install door hinges on the body of a prototype Endurance electric pickup truck on June 21, 2021 at the Lordstown Motors assembly plant in Ohio.
Michael Wayland / CNBC
In addition to his financial problems, Lordstown is the subject of an investigation by the Securities and Exchange Commission and the Department of Justice regarding its release agreement as well as potentially false or misleading statements by former executives, including the founder and ex – CEO of Steve Burns Company.
Burns and his CFO left the PSPC-backed company in June after an internal investigation revealed “issues with the accuracy of certain statements” regarding Lordstown’s pre-orders, particularly the seriousness of the orders and their originator.
In May, short seller Hindenburg Research claimed the company had misled investors, including using “bogus” orders to raise capital for its Endurance electric van. The short seller also said the pickup was years away from production. Lordstown maintained that it was on track to start manufacturing the vehicle in September.
Lordstown had previously said the internal investigation revealed that Hindenburg’s report “is in many ways false and misleading”.
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