Lordstown Motors Could Have Cash Lifeline With Foxconn Factory Sale: What Investors Should Know

One of the most talked-about electric vehicle companies in 2021 has been Lordstown Motors Corp RIDE. The company has plans to bring an electric pickup truck, the Endurance, to the market but has faced several setbacks.

Lordstown and its shareholders may have found a lifeline Thursday.

What Happened: Lordstown Motors and Foxconn are nearing a sale of the Ohio factory owned by Lordstown, according to Bloomberg.

A sale could bring in much-needed cash for Lordstown Motors, which earlier this year said it would not be able to meet production goals without funding.

A deal could be announced this week, according to Bloomberg's sources. No financial figures were disclosed relative to the price of the factory.

Lordstown Motors bought the factory from General Motors Corp GM in 2019. General Motors owns a small stake in Lordstown Motors.

Related Link: Lordstown Motors Shares Fall On Lowered Guidance, Need For Capital 

Why It’s Important: Lordstown Motors could continue to build the Endurance truck in the factory, according to the report. The company could also benefit from utilizing Foxconn as a partner.

Lordstown was not planning on using the entire space in the factory, so selling it and leasing back space could turn into a winning play by an electric vehicle company that needs cash and working space.

New Lordstown Motors CEO Dan Ninivaggi said the company was looking for partners on the plant, so Thursday’s news shouldn’t come as too big of a surprise.

“The key to unlocking financial potential is maximizing the value of the Lordstown facility,” Ninivaggi said in a previous interview.

Foxconn, known as a key assembler of Apple Inc’s AAPL iPhone, is working on establishing itself as a key player in electric vehicle manufacturing. With Apple eyeing entering the electric vehicle market, Foxconn remains a name thrown out as a possible partner.

Purchasing the plant could allow Foxconn a place to manufacture at scale in the U.S. Foxconn struck a deal with Fisker Inc FSR to work on a $30,000 electric vehicle.

Lordstown Motors is planning to deliver the Endurance to customers next year. The company is facing a change of CEOs and a SEC investigation as it tries to move forward with production.

RIDE Price Action: RIDE shares were up 6.25% at $7.82 Thursday. Shares have traded between $4.77 and $31.57 over the last 52 weeks. 

Disclosure: Author is long shares FSR.