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Can Silicon Valley resuscitate the Rust Belt?
Just two years after acquiring a shuttering GM factory in Ohio, struggling electric-vehicle start-up Lordstown Motors is already poised to sell the plant — and the dream of bridging the old-world auto industry with new-world technology. The likely buyer? Foxconn, according to reports out Thursday.
Fox in the EV House
In a bid to diversify from consumer electronics, the Taiwanese chipmaker has been seeking to expand into the EV market. Step one: teaming up with Geely, China's largest private automaker, as well as Fisker Inc, a California-based start-up that's yet to produce an EV. Step two: find a plant to produce the high-tech rides.
For Foxconn, the deal to acquire the 6.2 million square-foot Lordstown facility may prove a bold move in the new direction. For Lordstown, it's another pothole on a very rocky road:
- Lordstown bought the plant from GM in December 2019 for $20 million — and also accepted a $40-million loan from GM to support the purchase and launch the Endurance, its planned flagship line of electric trucks.
- In the following two years, Lordstown invested $240 million into retooling the facilities; went public via a SPAC merger in August after raising $500 million in funding; then subsequently ousted its embattled CEO. After all that, it has failed to bring the Endurance to market.
Lordstown has also been accused of misleading investors by inflating preorder numbers, and is now under investigation by the DOJ and the SEC. Making matters worse: the company says it will run out of cash by mid-2022. Now that's a car wreck in not-so-slow motion.
Out Foxed: Foxconn had been looking at producing EVs at its controversial $10.2 billion facility in Wisconsin, which has been sitting largely unused since construction completed. But Badger State laws restrict direct-to-consumer automobile sales, meaning the plant will likely continue collecting dust as an oversized data center.