Why Lordstown Motors (RIDE) Stock Is Up 22% Today
What Happened: The beleaguered electric vehicle startup said on Wednesday it has closed a $230 million deal to sell its Ohio factory to Taiwan’s Hon Hai Technology (OTC:HNHPF), better known as Foxconn, sending its shares higher after the bell.
The deal will infuse Lordstown Motors with the much-needed cash to continue the development of its Endurance electric pickup.
Lordstown Motors had in November entered an agreement with Foxconn for the sale of its Ohio facility, a former General Motors Co (NYSE:GM) factory.
The EV maker said said Foxconn would build the Endurance pickup truck at the facility under contract, besides other vehicles including Fisker Inc’s (NYSE:FSR) low-cost model that’s expected to be launched in 2024.
Why It Matters: The crucial deal lends Lordstown a fresh breath of air since — if the deal had not gone through — it would have been then forced to pay back $200 million Foxconn gave it as a downpayment over several months. The deal was initially expected to close in April but was pushed back.
The two companies also announced a joint venture named MIH EV Design LLC in which Apple Inc (NASDAQ:AAPL) supplier Foxconn will own 55% and the rest would be owned by Foxconn.
Taiwan-based Foxconn will commit $100 million to the joint venture, including a $45 million loan to Lordstown, to build a lineup of electric pickup trucks.
Photo: Courtesy of Trump White House Archive via Flickr