Taiwan's Foxconn Technology Group, the world's largest electronics manufacturer, is nearing a deal to purchase the electric truck startup Lordstown Motors Corp.'s Ohio plant, according to Bloomberg. The deal could be announced by the end of the week.
Sources familiar with the matter told Bloomberg that the electric truck maker was running low on cash. There was no mention of how much the deal was worth. Lordstown purchased the factory from General Motors in 2019. Bloomberg reports that the sale proceeds could propel the startup to strengthen its balance sheet and benefit from the large-scale manufacturing of its truck with Foxconn. Though we fail to see how the 'math' pencils out that selling the factory to the partner you are already manufacturing with will 'enable scale'? Is this shenanigans to bolster Lordstown's liquidity (on paper) as Foxconn recognizes its investment in this startup carmaker is at risk?
Lordstown Motors shares jumped as much as 8% to $7.98 during premarket trading. The company has lost 75% of its market value in the last three quarters.
The steep loss in market value is due to Hindenburg Research which accused the electric car startup of faking preorders. Hindenburg is best known for calling Nikola an "intricate fraud," which led to the departure of the company's founder and eventual probes by several regulatory bodies. This is eventually what happened to Lordstown by early summer when CEO Steve Burns and CFO Julio Rodriguez resigned. The Department of Justice has since been probing the company for false and misleading statements to investors.
As a reminder, the potential sale of the Lordstown factory comes after Foxconn bailed on a $10 billion factory in Wisconsin, which was supposed to employ 13,000 workers... so take this report with the pinch of salt it deserves.