The Lordstown Motors factory is where GM once operated, in Lordstown, Ohio, on October 16, 2020.
Megan Jelinger | AFP | Getty Images
Shares of Lordstown Motors surged by as much as 21% on Thursday following reports the embattled electric vehicle start-up is “near an agreement” to sell its large Ohio factory to iPhone maker Foxconn.
The companies are set to announce the deal as soon as later Thursday, according to Bloomberg News, which first reported the talks.
Lordstown, which went public in October through a SPAC deal, saw its stock rise as high as $8.93 a share Thursday before retreating to close at $7.98, up 8.4%. The company is valued at $1.4 billion.
Lordstown has been strapped for cash as it attempts to begin production of its first vehicle, an all-electric pickup truck called the Endurance. The company in June said there was “substantial doubt” about its ability to continue as a going concern in the next year because of problems funding the production of the Endurance.
While Taiwan-based electronics contract manufacturer Foxconn is best known for iPhone production, it’s attempting to broaden its manufacturing to electric vehicles. Most notably, the company earlier this year finalized a deal with Fisker, another EV start-up that went public through a SPAC, for electric vehicle production.
The value of the reported deal between Lordstown and Foxconn is unknown at this time, according to Bloomberg. Spokespeople with Lordstown Motors and Foxconn did not immediately respond for comment or declined to comment.
The EV start-up purchased the massive facility in Lordstown, Ohio, in 2019 from General Motors, which ceased operations at the plant as part of a restructuring plan. The start-up reportedly bought the facility for $20 million, a fraction of its overall value, and GM has assisted the company both financially and operationally with suppliers.
GM owns 7.5 million shares of Lordstown Class A common stock. It received the shares in exchange for equity value of $75 million in the EV company, most of which were in-kind services and linked to the sale of the property.
Workers install door hinges to the body shell of a prototype Endurance electric pickup truck on June 21, 2021 at Lordstown Motors’ assembly plant in Ohio.
Michael Wayland / CNBC
Aside from its financial troubles, Lordstown is under investigation by the Securities and Exchange Commission and Department of Justice regarding its deal to go public as well as potentially false or misleading statements from former management, including company founder and ex-CEO Steve Burns.
Burns and his CFO left the SPAC-backed company in June after an internal investigation found “issues regarding the accuracy of certain statements” around Lordstown’s preorders, specifically the seriousness of the orders and who was making them.
In May, short seller Hindenburg Research said the company misled investors, including using “fake” orders to raise capital for its Endurance electric pickup. The short seller also said the pickup was years away from production. Lordstown has maintained it’s on track to start making the vehicle in September.
Lordstown previously said the internal investigation found Hindenburg’s report “is, in significant respects, false and misleading.”