Tuesday, July 23, 2024
NewsLordstown Faces Uncertain Future Amid Talks of Foxconn Backing Out of Deal

Lordstown Faces Uncertain Future Amid Talks of Foxconn Backing Out of Deal

Lordstown Motors says Foxconn could be trying to back out of their partnership, which isn't good news for the Endurance pickup.

  • Foxconn owns the factory that produces the Lordstown Endurance electric pickup.

  • Lordstown has only produced about 30 trucks as of now and its share prices have fallen below 1$.

  • Foxconn could try to back out of the deal and use the factory to produce other EVs.

When Lordstown Motors ran into financial difficulties ahead of the launch of the Endurance electric pickup almost exactly a year ago, it sold its factory to Foxconn.

With the sale, both companies agreed to work together on the development of a new electric vehicle, and Foxconn was contracted to manufacture the Endurance at the former Lordstown factory in Ohio.

This partnership seemed to work for a while, but Lordstown Motors now warns that Foxconn could back out of the deal, which would seriously jeopardize its future.

This is because a provision in the original contract was breached by Lordstown since its stock price fell below $1 per share for 30 consecutive days, prompting the NASDAQ to issue a delisting notice.

This low share price could be due to the company’s production difficulties since it has only delivered about 30 trucks out of the promised initial run of a few hundred.

Apparently, this very low production rate is due to a lack of high-volume production equipment, in addition to a lack of funds.

At the end of last year, Lordstown Motors said it would be concentrating on a new electric vehicle using Foxconn-developed components, but this seems unlikely now.

Since Lordstown had to turn to Foxconn, a Taiwanese company that is best known for manufacturing the iPhone under contract for Apple, for additional funding, it is unlikely to survive a breakup of the partnership.

On the other hand, Foxconn might have more success in the EV market by working with better-established companies such as Fisker, for whom it will build the PEAR in Ohio.

In addition, the manufacturing specialist has launched the Foxtron brand in order to sell its own EVs in Asian markets.

For the moment, Lordstown says both companies are still working together on a solution, but the second $47.3 million installment of Foxconn’s investment in the fledging American automaker is due for May 8, which means we won’t have to wait long to see how the situation is resolved.

Source: Green Car Reports

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