Best known for manufacturing small electronic devices for companies around the world, Foxconn will soon be branching out to assemble automobiles in Ohio. On Wednesday, the Taiwanese Hon Hai Precision Industry Co. (traded as Foxconn) closed on a deal with Lordstown Motors to purchase a 6.2 million-square-foot plant that used to belong to General Motors.
The $230 million deal leaves Foxconn with the facility and 400 Lordstown manufacturing employees it’s supposed to use to assemble the delayed Endurance pickup. Though the long-term plan is to use the plant to become a contract manufacturer akin to Magna Steyr, with an emphasis on all-electric vehicles.
Despite Foxconn taking over production, Lordstown Motors is remain responsible for vehicle development, parts sourcing, testing protocols, regulatory homologation, and sales. Though the arrangement is slightly confusing, the Taiwanese firm plans to invest $100 million in a joint venture to engineer new EVs with Lordstown based on its own “Mobility-in-Harmony” (MIH) program.
Foxconn calls MIH an “open ecosystem” and has encouraged just about every entity in the automotive sector to work with it in developing a new platform that “provides an environment where all the major functions of an EV such as chassis, batteries, ADAS (Advanced Driver Assistance Systems), cyber security, cloud connectivity, BMS (Battery Management System), and many more can be developed onto.”
Lordstown CEO Dan Ninivaggi explained to Cleveland.com that the deal gives his company scale — something it had been fretting over since Endurance delays began in 2020. By partnering with the world’s largest provider of electronics manufacturing services, the Ohio-based EV startup believes it can ease supply chain issues, save itself some money in the long run, and finally get some vehicles rolling out of the factory.
“The key theme in the entire transaction with Foxconn if it gives us a more flexible and less capital intensive business model,” he said.
Subsequent interviews have shown that Ninivaggi feels confident that Lordstown is in a strong position in every respect but one. However, that’s supposed to be resolved now that help has arrived from overseas — partially anyway.
“We have about 250 engineers, product development people mostly in Farmington Hills [Mich.] and Irvine [Calif.]. We have purchasing, quality, everything but manufacturing,” The CEO told Automotive News.
The injection of cash from the deal might not be enough to ensure production of the Endurance begins on schedule this fall, Ninivaggi said. The company is working to raise an additional $150 million so it can keep its planned third-quarter start of limited production.
Lordstown this week reported its first-quarter loss narrowed to $89.6 million from a loss of $125.2 million a year earlier. It had a cash balance of $204 million, compared with $587 million a year earlier. It had received $200 million in down payments for its assets from Foxconn.
Even if Lordstown ends up folding, the facility already has other EV startups on the hook. Fisker is taking deposits for an affordable, high-volume EV it’s calling the Pear and leadership has stated that the model will be built at the facility in Lordstown, Ohio. There’s also been some speculation that Apple may finally move on Project Titan, leveraging its deep ties with Foxconn to finally build an all-electric vehicle that’s allegedly been in development since 2014.
It’s just fortunate that the factory doesn’t have a lot of high windows. Foxconn has unfortunately developed a bit of a reputation for labor violations in China after its highly publicized installation of suicide nets at a Shenzen iPhone factory. Hon Hai Precision Industry Co. has likewise been faulted with withholding payment, ignoring safety training, and employing far more workers than Chinese labor laws allow. This is particularly unsettling due to the limited nature of protections the nation allows for employees and the sustained nature of these accusations. Foxconn and Apple have even been faulted for knowingly benefiting from forced labor (slavery) supported by the Chinese government. But they’re just one of several multinational businesses (including some automakers) carrying that stain on their portfolio at this point.
[Image: General Motors]
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