Lordstown Motors on Monday warned that Taiwan’s Foxconn could also be trying to again out of an important funding deal that will hold the electrical truck maker operating—and that it’d go bankrupt if the problem 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 underneath $1 per share for 30 consecutive buying and selling days, triggering a delisting discover from NASDAQ (shares had been buying and selling at 30 cents on Monday). Lordstown reported that the businesses stay in talks.
Created to take over a former General Motors manufacturing facility in its namesake Ohio city to construct electrical vans, Lordstown bought the manufacturing facility to Taiwanese contact producer Foxconn final 12 months. After that deal closed in May 2022, the 2 firms agreed to a second deal wherein 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 underneath the funding deal final 12 months, however hasn’t made further funds, in line with CNBC. Under 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 Foreign Investment within the United States. That approval was granted April 25, Lordstown advised CNBC, that means Foxconn is obliged to launch the cash by May 8.
Foxconn might be finest referred to as the contract producer for Apple iPhones, however these days the corporate has tried to develop into EV manufacturing. The Lordstown affair has made for an inauspicious begin.
Last 12 months when it took cost of the plant and manufacturing, Foxconn mentioned the Lordstown Endurance pickup truck could be delivered later in 2022. Soon it turned clear that Lordstown nonetheless did not have sufficient money to supply greater than an introductory few hundred vans, if that, as a result of lack of high-volume manufacturing tools. The manufacturing facility has since made about 30 vans, however manufacturing has been successfully stalled.
In its fourth-quarter 2022 monetary outcomes, Lordstown indicated it will shift focus from the Endurance to a brand new EV seemingly utilizing Foxconn-sourced elements, 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 May 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 underneath the brand new Foxtron model that will not be destined for the U.S. The firm 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.