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UPDATE | Lordstown Motors confirms tentative deal to sell plant

Lordstown Motors acquired the former General Motors Lordstown Assembly Complex less than two years ago.

LORDSTOWN — Lordstown Motors Corp. has announced a tentative agreement to sell its 6.2-million-square-foot plant along Hallock Young Road for $230 million to Hon Hai Technology Group, otherwise known as Apple iPhone manufacturer Foxconn.

The companies intend to work together on electric vehicle production at the plant, the former General Motors Lordstown Assembly Complex, which Lordstown Motors purchased in November 2019 for $20 million.

Lordstown Motors now intends to enter into a long-term lease for a portion of the facility “for its Ohio-based employees” and Foxconn would offer employment to “agreed upon Lordstown operational and manufacturing employees.”

“The agreement between both companies would allow Lordstown Motors to leverage the technology and manufacturing expertise of Foxconn, as Lordstown Motors pursues the production of electric vehicles at its Ohio facility,” reads a news release issued this evening from Lordstown Motors. “The goal of the partnership is to present both Lordstown Motors and Foxconn with increased market opportunities in scalable electric vehicle production in North America.”

A separate contract manufacturing agreement would see Foxconn manufacture Lordstown Motors’ all-electric Endurance pickup truck and retain rights to future vehicles developed by the company. Limited production of the vehicle was slated to begin late this month. This deal would be contingent on the plant sale.

Lordstown Motors’ hub motor assembly and battery module lines, packing line assets and other assets would be excluded from the sale, according to the release.

Under the agreement — which is non-binding and subject to negotiations of “definitive agreements” — Foxconn would also purchase $50 million in Lordstown Motors’ common stock at $6.89 per share and retain them for a specified period. Lordstown Motors would also issue warrants for 1.7 million shares of its stock to Foxconn at $10.50 per share.

Bloomberg earlier today reported the electric vehicle startup is nearing a deal with Apple iPhone maker Foxconn Technology Group of Taiwan, citing "people familiar with the matter" who asked not to be named as the transaction has not yet been made public. The price of the potential sale was not disclosed.

Lordstown Motors executives in June warned investors that a cash crunch could keep the company from continuing past 2022. During the company's second-quarter earnings call in August, then-head executive Angela Strand said the company was in talks with "multiple [original equipment manufacturers] interested in leveraging the assets we have today,” including the plant.

The potential Foxconn deal could help Lordstown Motors reach mass production of the Endurance sooner, Bloomberg reported.

"This would be a positive development for the Valley," said Guy Coviello, president and CEO of the Youngstown/Warren Regional Chamber. "Lordstown Motors has a great, new vehicle. Foxconn is a well-established, robust corporation that can bring tremendous resources to bear."

Foxconn is the world's largest electronics manufacturer, and reported NT$5.35 trillion in revenue in 2020, or about $192 billion in U.S. dollars. Foxconn is currently looking to expand into the electric vehicle market, Bloomberg reported.

"In addition to utilizing more of the assembly plant, this increases the supply chain opportunities for Valley companies," Coviello said. "It also gives our team an opportunity to attract suppliers that would be new to our market."

In a separate Thursday announcement, Lordstown Motors said it "continues to move forward" with plans to start limited production of the Endurance for testing, validation, verification and regulatory approvals through the end of this year and into next year.

The company previously signaled that it was on-track to begin limited production in September.

"In light of the Foxconn agreement, the company will evaluate the potential impact of the parties’ contract manufacturing relationship on commercial production, supply chain opportunities with Foxconn" and integration of its worker teams, reads the release.

Executives are expected to update investors on production plans during the company's third-quarter earnings call set for mid-November.

In the thirty minutes following the Foxconn announcement, Lordstown Motors stock (NASDAQ: RIDE) rose 0.63 points in after-market trading to $8.63. Its Wednesday closing price was $7.36.

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