Lordstown needs $150M in capital to boost production, delays plant sale to Foxconn
EV maker said it would need to raise cash this year due to deferred tooling investments
It has time till May 18 to close the deal to sell its Ohio manufacturing plant to Foxconn
Lordstown Motors Corp (NASDAQ: RIDE) on Monday said it would need an additional $150 million in capital apart from its sale of assets to Taiwanese contract manufacturer Foxconn to begin boosting production of its all-electric pickup truck, the Endurance.
Shares of Lordstown plummeted almost 19% on Monday, after the market opened, but recovered some of its loss later in the day and are trading at $1.80, down 5.5%, at the time of reporting.
The electric carmaker said it has nine more days to sell its Ohio manufacturing plant to Foxconn.
Last November, Lordstown Motors said it had entered an agreement with Foxconn to sell the manufacturing facility for $230 million by May 14, excluding certain assets such as the hub motor assembly and battery pack lines.
However, the EV maker said it had extended the deadline by four days to May 18, and if the deal does not close by the next week, the company will have to pay back the $200 million it has received from Foxconn in down payments since November, including $50 million in the quarter ended in March.
“We’ve had constructive discussions with Foxconn,” Lordstown CEO Dan Ninivaggi said.
“It’s a complex deal. It’s taking a little bit longer than we expected. The fact that Foxconn agreed to extend the repayment deadline is a good sign.”
Lordstown Motors also said it would need to raise $150 million in cash this year, apart from the proceeds from the deal with Foxconn, because of deferred tooling investments, to scale up the production of the electric pickup truck, complete testing, purchase materials and vehicle components.
Moreover, supply chain woes and rising material costs are limiting the EV industry’s ability to manufacture sufficient cars to meet soaring demand.
The company on Monday reported its first-quarter earnings and said it had a cash balance of $204 million, compared with $587 million a year earlier.
Lordstown’s net loss for the quarter ended March 31 narrowed to $89.6 million, or 46 cents per share, from a loss of $125.2 million, or 72 cents per share, a year earlier.
Picture Credit: The Verge
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