Shares of Lordstown Motors Gain Traction After Foxconn Deal
LORDSTOWN, Ohio – Lordstown Motors Corp. said Tuesday that it’s making progress on the planning and pre-development of its next electric vehicle, which it plans to manufacture with Foxconn.
The type or model of the new vehicle was not disclosed, but will be built on Foxconn’s Mobility-In-Harmony, or MIH, platform, the company said in its third quarter financial report filed with regulators.
On Monday, Lordstown Motors announced that Foxconn would make an equity investment of $170 million into the company. Shares of Lordstown Motors, which trades under the ticker RIDE, were up 11.3% at $2.06 by 10:30 a.m.
The investment would come in the form of $70 million in Class A common stock and up to $100 million in direct preferred stock.
Foxconn’s $100 million investment replaces a joint venture agreement that the two companies signed in May, the company said.
“The investment will be into Lordstown and focus on the first product we will do in collaboration with Foxconn,” Lordstown Motors President and CEO Edward Hightower said during a conference call Tuesday morning.
Daniel Ninivaggi, Lordstown’s executive chairman, said that the $100 million investment disbands the joint venture. “We kind of think that direct investment in Lordstown is a better, simpler, easier structure, so I think it’s to our favor.”
Meantime, Lordstown Motors is searching for an original equipment manufacturer, or OEM, partner to help ramp up production of its first vehicle, the all-electric Endurance pickup.
“We continue to seek one or two OEM partners to help scale the Endurance,” Hightower said during the call. “The Endurance offers other OEMs opportunity to enter the market quickly at a relatively low cost.”
Foxconn and Lordstown Motors finalized a contract manufacturing agreement to produce the Endurance at Foxconn’s plant. In May, Foxconn purchased Lordstown Motors’ factory for $230 million.
Lordstown Motors has started limited production of the Endurance “at a very slow rate,” the company added.
Hightower said that production costs are currently higher than the vehicle’s anticipated sale price, which has caused the company to hold off on investing in hard tooling and other investments to limit the amount of new capital required to hit initial production targets.
Lordstown Motors announced earlier that it planned to manufacture 500 units of the Endurance, 50 of which would be produced by the end of the year. To date, the company has produced just 12 pickups.
The Endurance is a semifinalist for the North American Truck of the Year. Last month, more than 30 automotive journalists conducted test drives of the new vehicle.
“I’m proud of the accomplishments of the Lordstown and Foxconn EV production team in bringing the Endurance to commercial production,” he said.
Lordstown Motors closed the third quarter with a net loss of $154.4 million compared to a net loss of $95.8 million during the same period the previous year, the company announced today.
The electric-vehicle startup posted an operating loss of $154.8 million, which includes a $74.9 million impairment charge, a $30 million accrual for historical litigation, and $16.2 million charge to reflect the net value of inventory.
As of Sept. 30, 2022, Lordstown Motors said it had an ending cash balance and short-term investments of $204 million, “above internal expectations,” the company said.
Copyright 2023 The Business Journal, Youngstown, Ohio.