As the wave of interest in EV technology continues, one American manufacturer wants to ride it toward a profitable future. That’s fitting since for Lordstown Motors (NASDAQ:RIDE), since RIDE is the symbol under which it trades. The company announced this morning that it was nearing the finalization of a deal which would sell its Ohio plant to international electronic manufacturer Foxconn Technology, and it didn’t take long for RIDE stock to take off.
What Happened With RIDE Stock
The morning’s news brought a noticeable spike for RIDE stock, which is currently trading up 8%. This comes after Lordstown drew some short interest last week.
Although the week hasn’t been a smooth one for RIDE stock, the company is still very much in the green, rising by almost 22% since September began. Shares are still down quite a bit from where they were last summer. That said, they’ve started climbing again recently, and this new deal may be the catalyst that helps RIDE stock gain the market momentum it needs.
What It Means
This deal makes a lot of sense for Lordstown Motors, a company operating in a booming market but still clearly needs the cash to continue scaling operations.
The passing of this deal would result in the two companies conducting manufacturing in the same facility, a plant that was originally home to General Motors (NYSE:GM). This type of endeavor should supply Lordstown with the financial resources it needs to expand into larger-scale manufacturing and ultimately produce the multiple EV models that American markets demand.
It’s also a great deal for Foxconn. The Taiwanese electronics producer is known primarily for building the Apple (NASDAQ:AAPL) iPhone, but it is looking to tap into the fast-growing EV market. This pact could benefit investors who hold both both Foxconn and RIDE stock.
Investors should note that Foxconn already has an electric vehicle partnership with startup Fisker (NYSE:FSR).
Why It Matters
As Lordstown moves forward with the production of its highly touted EV, its Endurance pickup truck, a cash influx will be vital. The company has an opportunity to get one of the first EVs in its kind to U.S. markets but only if they can do so before competitors. Ford Motors (NYSE:F) is currently hard at work to expand its EV line, and it has the benefit of being one of the biggest names in American auto manufacturing.
Lordstown only owns one factory and the fact it was once owned by GM gives it the appearance of a traditional American auto producer. The ability to start turning out innovative new EVs would be exactly what it needs to establish itself.
This deal is said to be near completion and when it is finalized, there is plenty of reason to believe that RIDE stock will take off again. The EV race is still going on, and this type of development is exactly what can help Youngstown get back into it.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
