Lordstown Motors, an Ohio-based electric vehicle startup, has announced its agreement in principle to jointly work on electric vehicle programs with iPhone maker Hon Hai Technology Group, more commonly known as Foxconn.
Lordstown announced earlier this year that it was grappling with significant cash flow issues and likely would not maintain enough capital to keep its doors open until the end of June 2022. Lordstown said in a filing of June 2021 with the SEC that its ability to remain open “depends on its ability to complete the development of its electric vehicles, obtain regulatory approval, begin production on a commercial scale and initiate the sale of these electric vehicles. vehicles ”. With cash flow issues, the automaker was likely forced to enter into a partnership with a company that had no financial worries. Foxconn appears to be Lordstown’s choice.
Lordstown confirmed the joint partnership with Foxconn on Thursday:
Lordstown Motors Corp, a supplier of electric light trucks focused on the commercial fleet market, today announced that the company and Hon Hai Technology Group (“Foxconn”) have reached an agreement in principle to work jointly on vehicle programs. electrics in the assembly of the company. factory in Lordstown, Ohio. As part of this announcement, the Company is today updating its production plan and financial outlook.
Following the June 2021 filing that said Lordstown was due to close in a year, the company made several changes to its boardroom. He relieved CEO Steven Burns and CFO Julio Rodriguez of their roles a few days later. After appointing Becky Roof as interim chief financial officer and Angela Strand as executive chairman, the company then began to scramble to find financial backing. However, Lordstown’s concerns do not end there. Following a report from Hindenburg Research claiming Lordstown was exaggerating its pre-order numbers, particularly after former CEO Burns said the company had racked up 100,000 orders for its initial vehicle, the Endurance pickup.
The SEC has decided to issue Post-Effective Amendment # 2 to an S-1 registration statement, requesting more information and documentation that could prove the pre-order counts claimed by Lordstown. Lordstown obliged to subpoenas. At the end of August, she announced that her new CEO would be Daniel Ninivaggi, a veteran of Icahn Automotive Group LLC and Hertz Global Holdings, Inc. where he was a director.
New partnership with Foxconn helps Lordstown solidify its Endurance manufacturing plans:
The Lordstown Motors team continues to move forward with their plan to build a limited number of vehicles for testing, validation, verification and regulatory approvals during the remainder of 2021 and the first part of 2022 In light of the Foxconn Agreement, the Company will assess the potential impact of the parties’ contract manufacturing relationship on commercial production, supply chain opportunities with Foxconn and the appropriate onboarding and timing of the teams. operations and will provide an update on its production plan in our next third quarter 2021 earnings call currently scheduled for mid-November.
It also updated its financial outlook, which consists of revised figures from the second quarter 2021 earnings call:
- Capital expenditure – unchanged in total from $ 375 million to $ 400 million, including changes in the timing of tooling and equipment purchases and the inclusion of planned tooling expenses previously included in R&D expenditure.
- SG&A expenses – $ 105 million to $ 120 million, up from $ 95 million to $ 105 million, mainly due to higher legal and professional fees.
- R&D expenses – $ 320-340 million, up from $ 310 million to $ 320 million, largely due to increased prototyping and pre-production expenses, reduced by the impact of shifting planned spending from flexible tooling to capital spending, as mentioned above.
- Cash balance as at September 30, 2021 – $ 210 million to $ 240 million, down from $ 225 million to $ 275 million, which includes approximately $ 20 million of proceeds from the issuance of common shares under the purchase agreement. shares of the company in August and September, but excludes the proceeds from Foxconn’s $ 50 million purchase of the Company’s common stock, as announced today.
Do not hesitate to contact us for advice! Write to us at [email protected], or you can email me directly at [email protected].