Lordstown Motors, the long-suffering manufacturer of battery electric vehicles, said in a statement with the US Securities and Exchange Commission on Monday that it had not yet closed a $230 million deal with Foxconn by the May 14 deadline, which would have allowed it to continue operations.
Under the terms of the agreement, the Taiwanese technology supplier Foxconn to buy former GM assembly plant for $230 million where Lordstown plans to build its first car, Endurance all-electric pickup truckand to reimburse Lordstown for operating and expansion expenses incurred since September 1.
Lordstown said in a statement that its ability to continue operating the company and meet production targets for Endurance depends on the deal with Foxconn.
If the deal is not completed by May 14 and Foxconn does not grant an extension, Lordstown will have to pay back $200 million it has received in advance payments from the company since November, including $50 million for the quarter just ended.
Despite the challenges, the company said it hopes to build a limited number of pre-production vehicles by July for testing, certification, review and regulatory approval, and to demonstrate the Endurance’s capabilities to potential customers.
Under the terms of the deal, Lordstown will continue to own the motor-wheel assembly line, as well as the battery module and packaging line assets, certain intellectual property rights, and other excluded assets.
“We are outsourcing all Endurance production to Foxconn following the sale of our Lordstown facility,” Lordstown wrote in a SEC filing. “Foxconn will also manage the assets we continue to own at the facility after the closure.”
The electric truck maker, which went public in October 2020 as a result of SPAC’s $1.6 billion merger with DiamondPeak Holdings, has yet to release a vehicle. The company posted a $90 million loss for the three months ended March 31 and traded at $1.91 a share on Monday morning.
At the same time, the company is under study of both the SEC and the U.S. Department of Justice for allegedly misleading investors by exaggerating its production capabilities and the demand it sees. Six months after Lordstown debuted on NASDAQ Hindenburg Research, the New York short-selling activist published a report a warning about fictitious pre-orders, such as a $735 million sale of 14,000 trucks to E Squared Energy, based in a small apartment in Texas that does not operate a fleet.
Its CEO Steve Burns, resigned in June 2021 after an internal investigation debunked his claim that the company had received 100,000 legitimate pre-orders for its pickup truck.
Lordstown said it will continue to incur high legal fees as the SEC investigation continues.
Credit: techcrunch.com /