Lordstown Motors on Monday warned that Taiwan’s Foxconn could also be seeking to again out of a vital funding deal that may maintain the electrical truck maker working—and that it would go bankrupt if the difficulty is not resolved.
In a regulatory submitting first reported by CNBC, Lordstown mentioned it obtained a letter from Foxconn on April 21 alleging that the would-be truckmaker was in breach of a funding deal as a result of its inventory had fallen below $1 per share for 30 consecutive buying and selling days, triggering a delisting discover from NASDAQ (shares have been buying and selling at 30 cents on Monday). Lordstown reported that the businesses stay in talks.
Created to take over a former Normal Motors manufacturing facility in its namesake Ohio city to construct electrical vehicles, Lordstown bought the manufacturing facility to Taiwanese contact producer Foxconn final yr. After that deal closed in Could 2022, the 2 corporations agreed to a second deal during which Foxconn would make investments as much as $170 million in Lordstown, which CNBC calculated as a 19.3% stake within the U.S. firm.
Foxconn paid the primary $52.7 million due below the funding deal final yr, however hasn’t made further funds, based on CNBC. Beneath the phrases of the deal, Foxconn is meant to take a position an extra $47.3 million inside 10 days of regulatory approval by the Committee on Overseas Funding in the US. That approval was granted April 25, Lordstown advised CNBC, that means Foxconn is obliged to launch the cash by Could 8.
Foxconn might be finest often known as the contract producer for Apple iPhones, however currently the corporate has tried to broaden into EV manufacturing. The Lordstown affair has made for an inauspicious begin.
Final yr when it took cost of the plant and manufacturing, Foxconn mentioned the Lordstown Endurance pickup truck could be delivered later in 2022. Quickly it turned clear that Lordstown nonetheless did not have sufficient money to supply greater than an introductory few hundred vehicles, if that, because of the lack of high-volume manufacturing gear. The manufacturing facility has since made about 30 vehicles, however manufacturing has been successfully stalled.
In its fourth-quarter 2022 monetary outcomes, Lordstown indicated it might shift focus from the Endurance to a brand new EV seemingly utilizing Foxconn-sourced parts, and sure constructed on the identical Ohio plant. Lordstown and Foxconn had agreed to finalize a plan for joint growth of a brand new EV by Could 7, after which Foxconn would make investments an extra $70 million, however that plan hasn’t been finalized, CNBC reported.
Foxconn in the meantime has been pivoting to creating its personal EVs, together with some below the brand new Foxtron model that might not be destined for the U.S. The corporate additionally has contract-manufacturing offers with different automotive startups, together with plans to construct the $29,900 Fisker Pear EV on the identical ex-Lordstown manufacturing facility in Ohio.