[ad_1]
Text size
Courtesy of Lordstown
Electric vehicle starting
Lordstown Engines
needs money and iPhone assembler Foxconn wants to enter the auto business, so the two have struck a win-win deal.
Late Thursday, Lordstown (ticker: RIDE) and
Hon Hai Precision Industry
(2317.Taiwan) – better known as Foxconn – announced a “tentative deal”. Lordstown will sell its factory and then pay Foxconn to assemble electric vehicles.
Foxconn will buy $ 50 million in Lordstown stock and pay $ 230 million for the Ohio auto plant. He will also get 1.7 million warrants to buy more Lordstown stock at $ 10.50 a share.
Lordstown will then pay Foxconn to assemble their vehicles, although the terms are still being negotiated.
Adding it all up, the deal with Foxconn is expected to more than double Lordstown’s cash balance. Labor costs will also drop. Lordstown’s manufacturing employees will move to Foxconn, but the company will have to pay Foxconn for assembly services.
The money that comes in the door is everything to Lordstown these days. The company said in May that it needed more money to bring its trucks to market. After that, the company’s own accountants questioned Lordstown’s ability to continue operating without major changes. This agreement is considered a major change.
Lordstown shares are up about 5% in pre-market trading.
S&P 500
and
Dow Jones Industrial Average
are both down about 0.4%.
“We are excited about the prospect of joining forces with a world-class smart manufacturer like Foxconn and believe this relationship will bring operational, technological and supply chain benefits to our business,” said Daniel Ninivaggi, CEO of Lordstown, in the company’s press release. “The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and profitable supply chain, while allowing Lordstown Motors to focus on commercializing Endurance. “
Along with the deal with Foxconn, Lordstown briefed investors on its recent financial performance. The company is still building test vehicles in late 2021 and early 2022.
The company’s cash balance at the end of the third quarter is approximately $ 225 million, compared to the expected $ 250 million. Lordstown spent more on legal fees and R&D than initially expected. Lordstown was not immediately available for comment.
Foxconn, for its part, is embarking on the automobile. He also has an agreement to build the second vehicle planned by
Fisker
(FSR), which is expected to hit roads around 2023.
Hon Hai stock was down 1.9% in overseas trading on Friday.
Write to Al Root at [email protected]
[ad_2]
Source link