Foxconn increases investment in Lordstown Motors
The Taiwanese contract manufacturer Foxconn is investing a total of up to 170 million US dollars in the US electric car start-up through the purchase of ordinary shares and newly created preference shares. This brings Foxconn’s stake in Lordstown Motors to almost 20 per cent.
The transaction is expected to take place shortly. If successfully completed, Foxconn subsidiary Foxconn Ventures Pte Ltd will hold all of Lordstown’s outstanding preference shares and 18.3 per cent of the ordinary shares. It will also receive two seats on the supervisory board. This is likely to make Foxconn the largest shareholder, as the 18.3 per cent stake surpasses Lordstown founder Stephen Burn’s 17.2 per cent stake.
Lordstown Motors announces it will use the proceeds from the sale of the ordinary shares for general corporate purposes and the proceeds from the sale of the preference shares to fund a “new electric vehicle programme” in partnership with Foxconn. In addition, the partners state that the $100 million direct investment in preferred shares replaces the joint venture financing previously announced by Foxconn and Lordstown Motors.
This new deal comes about a year after the startup sold its Lordstown factory in the US state of Ohio to Foxconn. Production of the Endurance electric pickup truck under Foxconn’s direction started there in September 2022. For Lordstown, a successful start to production is essential. The electric car start-up is struggling with scarce funding. This is why the unorthodox constellation with Foxconn as the buyer of the Lordstown plant came about. Foxconn signed the final purchase agreement in November 2021. The purchase price was 230 million US dollars. Foxconn also acquired Lordstown shares at the time.
The Taiwanese contract manufacturer also wants to use the current deal to push its electric car platform MIH, which will be presented in autumn 2020. Foxconn thus states that it would “deepen the relationship between Lordstown and the EV development platform: “In the future, there will also be opportunities to share Lordstown’s technical resources with other customers to further expand the MIH EV ecosystem (…)”, Foxconn is quoted as saying in the Reuters report. In other words: Lordstown’s know-how and services are apparently to be offered to third-party customers using the MIH platform.
Lordstown CEO Edward Hightower specifies that third-party customers will be offered the skills of Lordstown’s vehicle development team, including “all critical elements of market introduction in both the prototype, pre-production vehicle and commercial production phases”.
Hightower joined Lordstown in November 2021, initially starting as president and also taking over the CEO post from Daniel Ninivaggi in July 2022. The latter moved to the post of executive chairman to focus on capital and partner raising. The management shake-up was aimed at “accelerating efforts to launch production of the pickup”, another Reuters news agency article said in the summer, among other things.
“We will continue to move production slowly as we still have issues with sourcing and availability of parts. We expect to ramp up the production rate in November and December,” Hightower had announced in late September. “We expect to deliver about 50 vehicles to customers in 2022 and the rest of the first batch in the first half of 2023, subject to raising sufficient capital.”
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