Lordstown Motors has struggled with a moving target of challenges over the past few years, among them multiple lawsuits that accused the EV maker of breach of contract, conspiracy and outright fraud.
It seemed for a moment the company was destined for bankruptcy, when a unique opportunity arose. Foxconn, the global electronics contract manufacturing giant based in Taiwan, handed the company an offer that was tantamount to a lifeline and in September of last year, the two parties came to an agreement…
Foxconn would buy Lordstown’s Ohio factory for $230 million, as well as purchase $50 million in stock, and the companies would parse out a deal for Foxconn to assemble Lordstown’s flagship SUV and build out its own EVs leveraging Lordstown technology.
But since then, the road has been rocky. In March it was revealed that the deal hit a snag as the two parties were reportedly struggling to come to terms on certain conditions. More recently, US regulators have cleared the deal, but Lordstown has confirmed the conditions to close still have not been met and instead of closing on the deadline of April 29th, Foxconn issued a press release.
In it, the EV company detailed that the variables in flux include “further negotiation and execution of a contract manufacturing agreement.” And while Lordstown said the talks are continuing, the stakes are high.
Foxconn has already paid the $200 million in down payments required by the agreement, and if the two parties can’t realize closing terms by May 14th, Lordstown is then obligated to repay this. Lordstown said in its press release that it can’t repay the money, and that Foxconn is entitled to take its assets instead.
The only thing standing between Lordstown and this lethal scenario is the potential for the parties to either agree or agree to extend the deadline, though it seems in the meantime that Lordstown is steeling investors against the potential for its worst week yet… so stay tuned.
