×

LMC, Foxconn push back deadline again

LORDSTOWN — An agreement between Lordstown Motors Corp. and Foxconn for the Taiwanese tech giant to acquire the electric-vehicle startup’s auto assembly plant remains undone, and without it, could be the undoing of Lordstown Motors.

If a deal isn’t in place by May 18, Lordstown Motors would have to refund $200 million in down payments Foxconn made unless the deadline is extended.

It’s money Lordstown Motors doesn’t have, according to a regulatory filing Monday of the company’s first quarter financial results, and could result in Foxconn closing on liens on some or most of the electric-vehicle startup’s assets.

Under that scenario, Lordstown Motors likely would go out of business.

If the deal closes, Foxconn will pay another $30 million remaining on the purchase price and $27 million more to reimburse Lordstown Motors for certain operating and expansion costs, yet it’s still not enough money to hit production targets in 2022 for the company’s flagship vehicle, the Endurance pickup truck, the filing states.

The company would have to raise $150 million in new capital to launch the truck this year, about $100 million less than stated in February — a significant change in Lordstown Motors’ business plan as the company also plans to delay investments in hard tooling at the factory.

Much of the $250 million Lordstown Motors said it needed earlier this year was to be used on tooling.

The delayed spending on tooling and other investments is being done to “manage the balance sheet and limit the amount of new capital needed to achieve our initial production targets,” said Daniel Ninivaggi, CEO.

“As a result, over the next 12 months or so, we will be focused on selling vehicles to a relatively small number of strategic partners that offer the best opportunity for long-term relationships,” he said.

The company still plans to produce about 500 trucks this year. Some of the deliveries are expected in early 2023.

CONDITIONS

The asset purchase agreement between Lordstown Motors and Foxconn balances on coming to terms on a contract manufacturing agreement. That agreement is a condition of the factory sale being finalized.

Also, the companies have agreed to pursue a joint product development agreement to co-design and develop future vehicles based on Foxconn’s mobility in harmony platform.

“We’ve had constructive discussions with Foxconn,” Ninivaggi said. “It’s a complicated deal, it’s not just a simple contract manufacturing agreement. The joint product development agreement is fairly complicated, so it’s taken a little bit longer than expected, but I would say we’re in good, constructive dialogue and I think the fact that Foxconn agreed to extend the payment deadline is a good sign.”

The company spent $87.9 million in the quarter. Of that, $61.9 million was on research and development, including $21.9 million on running the plant, $20.2 million on engineering test and development and $10.7 million on components for prototype trucks.

When the quarter ended March 31, Lordstown Motors had $203.5 million. Including the final $50 million down payment from Foxconn, the $30 million balance at closing and the other $27 million Lordstown Motors is due in the transaction, it cash balance would have been more than $300 million.

The trading price of Lordstown Motors stock fell after Monday’s financial releasel. Shares opened at $1.61 per share, down 30 cents from the close Friday, and fell further to $1.56 per share just minutes after the market opened. The stock recovered some to close at $1.78 per share.

THE PEAR

Foxconn already has a contract manufacturing agreement in place with Fisker Inc., a California-based maker of electric vehicles, to manufacture its second vehicle, the PEAR.

Last week, Fisker’s chairman and CEO, Henrik Fisker, said the plan remains to produce the PEAR in Lordstown. The company has been assured by Foxconn that closure of the Lordstown Motors deal is on track.

So far, Fisker has received more than 2,500 reservations for the PEAR since opening reservations in February. The company has not actively promoted the vehicle to the public.

Fisker said his company has “clear production priority” at the Lordstown facility and “will take definitely the vast majority of the volume at the plant.”

The company is planning for three versions of the auto they predict will allow them to sell 1 million PEARs sometime in 2027. Not all, however, would be made in Lordstown. The company is contemplating production in China, Europe and India.

NEWSLETTER

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper? *
   

COMMENTS

Starting at $4.62/week.

Subscribe Today