Lordstown [NASDAQ: RIDE] Gains 6% on Report to Sell its Ohio Plant to Foxconn

Lordstown Motors Corp. [NASDAQ: RIDE] shares have skyrocketed 6% after the reports emerged that USA-based auto manufacturer has decided to divest its Ohio plant. The expected buyer of the Ohio plant turns out to be Taiwan’s Foxconn Technology Group. The emerging report hasn’t revealed the terms of the agreement.

The sources disclosed that both the firms are planning to ink an agreement in the coming days. The news of divestiture and the buying of the facility by Foxconn has excited the stock of the firm which highlighted the positive sentiments of the investors. Previously, Lordstown Motors made a deal with General Motors Co. in late 2019 to purchase the plant the automaker started in 1966.

Furthermore, the decision of divestiture comes at a critical time when the firm is in dire need of cash as the firm disclosed many times that it’s running out of cash and may go out of business next year. This sale will also help Lordstown Motors understand the advantages of large-scale manufacturing more quickly by constructing multiple models in the same facility along with Foxconn.

In addition, Lordstown Motors has experienced a probe by the U.S. SEC and the Justice Department after an internal investigation disclosed that previous management made erroneous statements about pre-orders for Endurance. The firm is pushing to start shipments of the pickup next year. It has been contemplated that divesting the facility and running alongside Foxconn could help a firm better exploit the facility where GM hired 10,000 people at its peak.