Promotions Lordstown Motors rose more than 23% in trading before the call on Thursday after electric car the startup said it closed a deal to sell its plant in Ohio to Taiwanese contract manufacturer Foxconn. The Taiwanese firm confirmed this will also make a compact PEAR car from Fisker model from 2024 together with Endurance at the Ohio plant.
Closing the deal buys Lordstown Motors a much-needed place to breathe and enables the production of electric pickups for success, said Danny Husson, an analyst at AJ Bell.
“Making electric cars is an expensive business in the best of times. Now supply constraints are making life incredibly difficult, and Lordstown Motors and its shareholders will feel a drunken sense of relief today,” Hewson added.
The creation of production lines for electric vehicles is a capital-intensive process, and in the past startups have struggled to raise sufficient capital for mass production of vehicles.
Foxconn will now produce the Endurance electric pickup from Lordstown Motors, which will begin production in the third quarter of the year and will be in the hands of customers in the fourth quarter.
Lordstown Motors will retain some assets, including hub engines, battery assembly lines and intellectual property. The company said closing the deal would result in revenue of $ 260 million, including reimbursement of some operating costs and expansion costs.
Shares fell more than 95% from a high of $ 30 a share in September 2020, weeks after they went public through a merger with a blank check company. It is currently trading below $ 2.
Report by Akash Sriram and Bansari Mayur Kamdar in Bangalore; Edited by Krishna Chandra Elura