(Bloomberg) – Lordstown Motors Corp., the cash-strapped electric truck maker, is about to reach an agreement to sell its highly politicized Ohio factory to Taiwanese Foxconn Technology Group, people familiar with the matter said.
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The companies will announce the pact later this week, said people, who asked not to be named as the plan is not yet public. They did not disclose the value of the transaction. Lordstown Motors closed a deal with General Motors Co. in late 2019 to buy the automaker’s plant, which opened in 1966.
The sale will raise much-needed funding and potentially help Lordstown Motors realize the benefits of high volume production more quickly by building multiple models on the same facility with Foxconn. For the largest maker of Apple Inc.’s iPhone, the plant would establish the company’s auto-manufacturing presence in the United States while moving into electric vehicles.
A Lordstown Motors spokesman declined to comment. Foxconn representatives did not immediately respond to requests for comment. Lordstown Motors shares rose 8.4% to $ 7.98 ahead of regular trading on Thursday. The company lost almost three quarters of its market value in the past year.
Lordstown Motors has been investigated by the Securities and Exchange Commission and the Department of Justice after an internal investigation concluded that previous management made inaccurate statements about pre-orders for the Endurance. The company is pushing to begin shipping the pickup next year.
Even if the endurance is well received by customers, Lordstown Motors will not be using its factory in Ohio to full capacity in the foreseeable future. The sale of the plant and the parallel operation with Foxconn could help the company make better use of the plant, where GM employed 10,000 people at peak times.
GM’s decision in 2018 to close the plant was a blow to then-President Donald Trump, who a year earlier kept rally-goers from selling their homes because of all the jobs he was promising to bring back. The Democrats have taken the development as a symbol of promises that Trump has not kept to voters in an important battlefield state.
Lordstown Motors had to rebuild its base after ousting Steve Burns, its founder and chief executive officer, in June for misrepresenting endurance orders. The company has repeatedly warned that its going concern status in less than a year after merging with a special purpose vehicle (SPAC) public is in doubt.
Burns’ successor, CEO Dan Ninivaggi, said in an interview last month that he is looking for partners to help the company take full advantage of what was once the largest industrial employer in the Mahoning Valley.
“The key to unlocking financial potential is maximizing the value of the Lordstown facility,” Ninivaggi said at the time. “We are examining various alternatives. It can take different forms. That’s job one for me. “
Foxconn hopes to replicate its smartphone success by building customers’ electric vehicles from the chassis up. The EV business is rapidly expanding at a time when big tech companies from Apple to Xiaomi Corp. invest heavily in next-generation mobility technologies.
Last year Foxconn launched an open EV platform, signed a manufacturing contract with Fisker Inc. and partnered with Thailand’s state-owned conglomerate PTT Pcl.
Earlier this year, Chairman Young Liu of Foxconn’s flagship unit, Hon Hai Precision Industry Co., said the company was considering building an electric vehicle manufacturing facility in Wisconsin as the first US automotive outpost. As Foxconn builds its automotive muscles, it is seen as a competitor in the race to make electric vehicles for Apple.
Read more: IPhone assembler Foxconn sets up Auto Arm as Apple Car Looms
Foxconn has a controversial history of moving its manufacturing capabilities to the U.S. The Taiwanese company originally committed to investing $ 10 billion in a facility in Wisconsin in exchange for billions of dollars in potential subsidies, a project that was supported by then President Trump. That vision never came true, and Liu said earlier this year he was trying to figure out what to do at the location.
(Updates on stock trading in paragraph four.)
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