Lordstown stock plunged after the embattled EV startup inked a deal to sell its Ohio plant to iPhone supplier Foxconn, while revising plans to start production of the Endurance truck, its first electric vehicle.
Taiwan’s Foxconn agreed in principle to buy a Lordstown Motors (RIDE) factory in Ohio for $230 million, the companies said late Thursday. Foxconn also will buy $50 million worth of common stock in Lordstown.
The deal is contingent on both parties reaching a contract manufacturing agreement. That would see Foxconn assemble Lordstown Motors’ Endurance at the Ohio plant. And Lordstown hopes to lease a portion of that facility for its employees.
Bloomberg reported earlier that a deal between Lordstown and Foxconn was near.
Just two years ago, Lordstown bought the 640-acre, 6.2 million-square-foot factory in northeast Ohio from General Motors (GM) for $20 million.
For Foxconn, the Lordstown deal furthers its goal to turn into a contract manufacturer for makers of electric vehicles as well as Apple (AAPL). It already has a deal to assemble vehicles for Fisker (FSR).
And for Lordstown, the pact would secure an established manufacturing partner while giving it much-needed cash. That could hasten its plans to mass produce the Endurance, while potentially lowering costs.
The EV startup has struggled to get production under way. It said in a separate release Thursday that it’s making progress on building the Endurance in limited numbers the rest of this year and in the first half of 2022. Just in August, it had expected to launch initial production by end of September and to start Endurance deliveries in Q1 2022, ramping up in Q2 and beyond.
Lordstown Stock, EV Stocks
Shares of Lordstown Motors tanked 18% on the stock market today, undercutting the 50-day line. Lordstown stock surged 8% Thursday on reports of the Foxconn deal But it remains deep in a correction with no buy point in sight despite a nice rally off August lows, according to MarketSmith chart analysis. GM eased a fraction Friday after posting a sharper-than-expected decline in Q3 U.S. auto sales.
Like Lordstown, some EV startups are focused on the design and technology of electric vehicles, while contracting out the actual production. Others, including Lucid (LCID), will make and deliver their own vehicles.
On Wednesday, Lucid stock surged 9% on reports that its first electric vehicle, the Air luxury sedan, is rolling off assembly lines in Arizona. The EV stock was already on a tear, after news that its Air Dream edition will beat Tesla (TSLA) on range. Lucid stock gave back a big chunk of that gain Thursday, falling 3.4%. LCID stock sank 3% on Friday.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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