By Claudia Assis
Shares of Lordstown Motors Corp. /zigman2/quotes/211334938/composite RIDE -5.92% rallied more than 20% in the extended session Wednesday after the electric-vehicle maker cemented a deal to sell its plant to Foxconn for $230 million, providing Lordstown with much needed cash and giving the Taiwanese electronics contract maker a toehold in commercial EVs.
Foxconn /zigman2/quotes/204111604/delayed TW:2354 0.00% , also known as Hon Hai Technology Group, makes a plethora of electronics for tech companies, including Apple Inc.’s /zigman2/quotes/202934861/composite AAPL -1.28% iPhone, and has a deal to make passenger EVs with Fisker Inc. /zigman2/quotes/209924856/composite FSR -5.43% .
Foxconn has agreed to make a $100 million down payment on the Lordstown, Ohio, plant by Nov. 18, with additional $50 million down payments on Feb. 1 and no later than April 15. The balance is due at closing, the companies said.
The companies also have agreed to enter a contract manufacturing agreement forLordstown’s Endurance pickup truck. Lordstown and Foxconn will pursue a joint venture to co-design and develop vehicle programs for global commercial fleets, with both companies having the right to sell those EV programs in North America and internationally, they said.
Upon the deal’s closing, Foxconn will receive 1.7 million warrants to buy Lordstown common stock at a price of $10.50 a share.
Foxconn and Lordstown inked an in-principle deal in September. At the time, Foxconn said that the Ohio facility would also “serve as a speed-to-market asset that would also support” Fisker.
Last year, Foxconn announced an expansion that included working with EV companies, and in January entered a joint venture with Chinese auto maker Geely Automobile Holdings Ltd. /zigman2/quotes/200716015/delayed HK:175 +1.14% , which sells Volvo vehicles and other brands.
The partnership with Lordstown marks the start of integrating resources and developing Ohio into Foxconn’s “most important electric-vehicle manufacturing and R&D hub in North America,” said Young Liu, Foxconn’s chairman.
“As we look to inject Hon Hai’s software and hardware capabilities in the information and communications industry with the wealth of automotive experience that resides in this town and our partners, we will be able to provide customers with more real-time and efficient electric vehicle products,” Liu said.
The deal provides Lordstown “a better opportunity to fulfill its original mission of satisfying the growing demand for electric vehicles, particularly in the underserved commercial market, with a more flexible business model,” Chief Executive Daniel Ninivaggi said in a statement.
Lordstown in June warned investors it could run out of money, adding “going concern” language to a regulatory filing. That followed the departure of its then-CEO and founder Steve Burns and its chief financial officer amid doubts over its order book, with the company later clarifying that the orders it had were not binding.
The company’s 6.2 million-square-foot manufacturing plant used to belong to General Motors Co. /zigman2/quotes/205226835/composite GM -2.51% , which used it to make some of its compact cars and was slated to close as GM focused on larger, more profitable vehicles.
Earlier Wednesday, Lordstown announced a slew of executive appointments, including naming Adam Kroll its chief financial officer, effective Oct. 25, and Edward T. Hightower as president, effective Nov. 29.