Foxconn buys Lordstown plant & signs manufacturing partnership

Foxconn will buy the car plant of the electric car start-up Lordstown Motors in Lordstown in the US state of Ohio. This is provided for in an agreement in principle that has now been concluded between the two sides. Foxconn will then take over the production of the electric pickup truck Endurance for Lordstown Motors.

++ This article has been updated. Kindly continue reading below. ++

Lordstown estimates the purchase price for the plant at 230 million dollars. Back in August, the financially troubled electric car start-up publicly expressed the idea of sharing its production facility with other carmakers. The company currently uses only about 20 per cent of the plant’s 6.2 million. Now it has turned into a different concept: Foxconn, known primarily as a Taiwanese contract manufacturer for Apple smartphones, but increasingly active in the eMobility business, will take over the entire plant and become active as a contract manufacturer for Lordstown. The focus is on the series launch of the Endurance.

Fisker is also expected to profit from the deal: According to Henrik Fisker, the new type of electric car planned by Fisker and Foxconn under the project name PEAR could come onto the market earlier than previously planned. Fisker concluded a contract for vehicle assembly with Foxconn in May. Fisker CEO Henrik Fisker said in an interview on Thursday that Foxconn will initially build 150,000 vehicles a year for Fisker and start production by 2024.

Lordstown, meanwhile, will not only get the purchase amount in its coffers, but also a separate investment from Foxconn. Accordingly, the Taiwanese will contribute 50 million dollars to Lordstown’s share capital in the course of the transaction. In addition, both sides have agreed that a maximum of the plant’s employees will keep their jobs on site.

According to Young Liu, Foxconn’s CEO, the deal will help his company “achieve our goal of advancing our timetable for building electric vehicle production capacity in North America”. Interesting in light of this: in April, Foxconn revised its plan for a $10 billion plant in Wisconsin. In the meantime, the production facility there is to be only a fraction as large as originally planned. Instead of 10 billion dollars, only 672 million dollars in investments are now planned, and instead of 13,000 new jobs, only 1,454 jobs are to be created.

Meanwhile, Lordstown’s recently appointed new CEO, Daniel Ninivaggi, said in an interview that the new partnership with Foxconn would allow Lordstown to move to a less capital-intensive business model and that the deal was expected to close in about six months.

Lordstown founder Steve Burns and its CFO Julio Rodriguez had resigned in June. Previously, short-seller Hindenburg Research had made serious allegations against the company, including the lack of production readiness of prototypes shortly before the start of production and also faked pre-orders. Previously, production targets were cut and higher capital requirements were announced.

Lordstown Motors had officially warned of going-concern risks for the company in a notice to the US Securities and Exchange Commission in June. In August, Angela Strand, who temporarily led the company as executive chairwoman in the absence of a CEO, said she was in talks with several potential partners about sharing the Ohio plant to bring money into the coffers. The Ohio start-up has now made the results of these talks public.

Update 12 November 2021

Foxconn has now signed a definitive purchase agreement with Lordstown Motors for its Lordstown car plant. The purchase price, as mentioned above, is $230 million. Foxconn has also acquired $50 million worth of Lordstown shares and will also receive 1.7 million stock warrants as part of the agreement upon closing.

The first instalment for the car plant, worth $100 million, is due on 18 November 2021, according to the partners. The acquisition of the manufacturing plant is expected to be completed in April 2022. The companies have also agreed to pursue a separate contract manufacturing agreement for the Endurance e-pickup, as detailed above. Its completion is targeted by 30 April 2022.

reuters.com, techcrunch.com, investor.lordstownmotors.com, foxconn.com, twitter.com (statement by Fisker), twitter.com (social media post by Henrik Fisker),  foxconn.com, investor.lordstownmotors.com (last 2 update)