As part of the agreement, Foxconn Ventures Pte. Ltd., a subsidiary of Foxconn, will invest up to USD 170 million in Lordstown Motors Corporation, making the Taiwanese contract manufacturer the companys biggest shareholder.
Foxconn will acquire 12.9 million shares on or after Nov. 22 along with an additional 26 million shares, bringing its total interest in Lordstown to 19.3% of both its preferred and regular stock, exceeding that of founder Stephen Burn, who held 17.2%, as per sources.
Interestingly, after terminating its earlier partnership agreement with the company, Lordstown mentioned that it would use the funds from the share sales to finance design and development operations for a new electric vehicle program in collaborative efforts with Foxconn.
It is worth mentioning that after the news, Mondays elongated trading saw shares rise 7% to USD 2.06 for the automaker.
Parallelly, the company disclosed a net loss of USD 154.4 million for the September quarter, and in a shocking turn of events, this was a bigger loss than the USD 95.8 million loss reported a year earlier.
Worldwide appetite for electric vehicles has surged, but supply chain difficulties and escalating cost of materials have made it challenging for companies to boost production and satisfy burgeoning demand.
After acquiring Lordstown's Ohio facility in September, Foxconn began producing pickup trucks under the Endurance brand. What triggered the acquisition was the need to get the finances necessary for Endurance's production to commence.
In order to reduce losses, the EV producer anticipates limiting Endurance manufacturing through 2023 or beyond, at least, until it can reduce its input costs.
On Monday i.e., 7th November, Lordstown stated that its bill of materials cost for the Endurance electric pickup truck was more than the price it intended to sell it for. It also added that until this cost was decreased, positive operating margins would not be realized.
Source Credits: - https://www.reuters.com/company/foxconn-ventures-pte-ltd/