Lordstown Motors, the long-suffering battery-electric truck maker, said in a filing with the U.S. Securities and Exchange Commission on Monday that it has not yet closed a $230 million deal with Foxconn ahead of a May 14 deadline that would allow it to remain a going concern.
Under the terms of the agreement, Taiwanese tech supplier Foxconn will buy for $230 million the former GM Assembly plant where Lordstown plans to produce its first vehicle, the all-electric Endurance pickup truck, and reimburse Lordstown for operating and expansion costs incurred since September 1.
Lordstown said in the filing that its ability to continue as a company and achieve production targets for the Endurance depends upon the deal with Foxconn.
If the deal is not completed by May 14 and Foxconn doesn’t grant an extension, Lordstown will need to pay back the $200 million it has received in down payments from the company since November, including $50 million in the quarter just ended.
Despite the challenges, the company said it hopes by July to build a limited number of pre-production vehicles for testing, certification, validation, and regulatory approvals, and to demonstrate the capabilities of the Endurance to potential customers.
According to the terms of the deal, Lordstown will continue to own its hub motor assembly line, as well as its battery module and pack line assets, certain intellectual property rights and other excluded assets.
“We will outsource all of the manufacturing of the Endurance to Foxconn with the sale of our Lordstown facility,” Lordstown wrote in the SEC filing. “Foxconn will also operate the assets we continue to own in the facility after closing.”
The electric truck maker, which went public in October 2020 through a $1.6 billion SPAC merger with DiamondPeak Holdings, has yet to produce a vehicle. The company reported a loss of $90 million for the three months ended on March 31 and was trading at $1.91 per share on Monday morning.
Meanwhile, the company is under investigation by both the SEC and the U.S. Department of Justice for allegedly misleading investors by inflating its production capabilities and the demand it sees. Six months after Lordstown's debut on the NASDAQ, Hindenburg Research, a New York-based activist short-seller, published a report warning of bogus preorders, such as the $735 million in sales of 14,000 trucks to E Squared Energy, a company based out of a small residential apartment in Texas that doesn’t operate a vehicle fleet.
Its CEO, Steve Burns, resigned in June 2021 after an internal investigation discredited his claim that the company received 100,000 legitimate preorders for its pickup truck.
Lordstown said it will continue to incur high legal costs as the SEC investigation continues.