Lordstown Motors shares rise after selling assets to Foxconn

A Lordstown Motors sign is seen outside the Lordstown Assembly Plant in Lordstown, Ohio, U.S., June 21, 2021. REUTERS/Rebecca Cook

May 12 (Reuters) – Shares of Lordstown Motors (RIDE.O) jumped more than 23% in trading before the bell on Thursday after the electric vehicle startup announced it had completed the deal to sell its plant in Ohio with Taiwanese subcontractor Foxconn (2317.TW).

The electric vehicle industry is battling supply chain disruptions and rising material costs, which are hurting their ability to ramp up production to meet scorching demand for electric vehicles in the United States amid skyrocketing fuel prices.

Reaching the deal gives Lordstown Motors some much-needed breathing room and gives production of its electric pickup a chance to succeed, said AJ Bell analyst Danni Hewson.

“Building electric vehicles is a costly business at the best of times. At present the shortage of supply is making life incredibly difficult and Lordstown Motors and its shareholders will feel a rather heady relief today,” added Hewson.

Setting up electric vehicle manufacturing lines is a capital-intensive process, and startups in the past have struggled to raise enough capital to mass-produce vehicles.

Foxconn will now manufacture Lordstown Motors’ Endurance electric pickup truck, which will go into production in the third quarter of the year and be in customers’ hands in the fourth quarter. Read more

The Taiwanese company will also manufacture Fisker Inc’s (FSR.N) PEAR compact car model from 2024 alongside the Endurance at the Ohio site.

Lordstown Motors will retain certain assets including its hub motor, battery assembly lines and intellectual property. The company said closing the deal resulted in proceeds of $260 million, including the reimbursement of certain operating and expansion costs.

The stock has fallen more than 95% from its peak of over $30 per share in September 2020, weeks after going public through a merger with a blank check company. It is currently trading under $2.

For an interactive chart, click here.

Reporting by Akash Sriram and Bansari Mayur Kamdar in Bengaluru; Editing by Krishna Chandra Eluri

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