Lordstown is Dangling by a Thread

Lordstown Motors, a publicly-traded EV startup with a peak value of $5.2 billion (currently sitting at $350 million), announced yesterday that it would delay the sale of its Ohio manufacturing plant to Foxconn by four days.

🤔 Why are we covering this?... To put it bluntly, if the deal isn’t completed then Lordstown is in BIG trouble. Like, closing-up-shop-for-good big trouble.

• The factory sale was set to be finalized in April, but both companies agreed on a slight deadline extension. The deadline has now been extended once again from May 14 to May 18.
• If the May 18 deadline isn’t hit and the parties don’t agree to another extension, Lordstown would be forced to pay back $200 million in down payments it’s already received from Foxconn. The company doesn’t have the cash to do so.

👀 Looking ahead… Assuming a successful closing, Lordstown will still likely have to raise $150 million or so by year-end in order to ramp up production of its Endurance pickup, its CFO said yesterday.

• The EV startup is also under SEC and DOJ investigation over its deal to go public, as well as potentially false or misleading statements from previous management.

🚘🔌 Zoom out: It hasn’t been a great week for EV startups. Shares of Rivian dropped 21% yesterday as major investor Ford offloaded 8 million shares following the expiration of its IPO lockup period.