By David Shepardson
WASHINGTON (Reuters) -Global technology firm Foxconn and startup Lordstown Motors Corp said on Friday they plan to pursue a U.S. Energy Department loan from a program to help pay for the costs of retooling a factory to build electric trucks.
Foxconn agreed in principle to buy a Lordstown assembly plant in northeast Ohio for $230 million and take over production of a new pickup truck, the companies said on Thursday. In January, Lordstown said it was in advanced talks with the department for a retooling loan.
Under the in-principle agreement, the Taiwanese tech giant, also known as Hon Hai Precision Industry Co, will manufacture Lordstown Motors’ Endurance full-size pickup truck at its Lordstown facility, and it will also support start-up automaker Fisker Inc, a Foxconn partner and customer.
Lordstown shares were down 12.5% in early trading on Friday.
Lordstown told Reuters in January 2020 it was pursuing a $200 million loan from the program and it formally applied in May 2020. The Energy Department’s Advanced Technology Vehicles Manufacturing (ATVM) program, which previously awarded loans to Tesla (NASDAQ:TSLA), Ford and Nissan (OTC:NSANY) to retool factories, has not made any new loans since 2011.
Lordstown and Foxconn said in a filing they will each "seek a proportionate amount of the ATVM Loan and will be responsible for a proportionate amount of any and all expenses incurred in obtaining the ATVM Loan."
The companies hope to complete a purchase agreement by Oct. 31 and complete the deal by April 30.
Foxconn, the world's largest contract electronics maker, best known for assembling Apple (NASDAQ:AAPL)'s iPhone, will invest $50 million in Lordstown equity. Lordstown Motors plans to enter into a long-term lease for a portion of the existing facility for its Ohio-based employees, and Foxconn plans to offer employment to many Lordstown employees.
Lordstown, which has struggled to launch production of its Endurance pickup, had previously said it was in talks to build vehicles for other automakers or lease space in its factory. It currently uses only 20% of the plant's 6.2 million square feet.