The troubled Lordstown Motors has announced it will be selling its Ohio production facility to the Taiwanese Hon Hai Precision Industry, better known as Foxconn. But this is not a case of the prospective automaker offloading its assets so it can pay off its debts in full retreat. Instead, Lordstown has asserted this is a necessary partnership that will help guarantee it can still deliver the all-electric Endurance pickup truck.
Terms stipulate that Lordstown Motors will sell the sprawling factory to Foxconn for about $230 million. Two years ago, the site was purchased from General Motors for a very breezy $20 million after the Detroit-based manufacturer decided to abandon the Chevrolet Cruze. Foxconn will also be buying up $50 million worth of common stock and effectively take responsibility for production at Lordstown Assembly. However there is a laundry list of things that need to be done before pickup assembly is even an option.
The duo have yet to formalize their agreement as to how the Endurance will be assembled (with Foxconn presumed to take the lead) or collaborate with the relevant suppliers so that production can be maintained. They will also need to assemble the vehicles that will be used for the testing, validation, and verification, in order they can get the necessary regulatory approvals for moving forward.
Foxconn is assumed to be jumping in because it’s a multinational entity with trillions in revenue and ties dispersed across the technology sector and eager to expand into vehicle production. Some of its biggest clients have included Amazon, Apple, BlackBerry, Cisco, Dell, Fisker, Google, Hewlett-Packard, Huawei, Intel, Microsoft, Motorola, Nintendo, Sega, Sony, Toshiba, Vizio, and Xiaomi. Globally, Foxconn has more than a million employees and it remains the largest employer in mainland China by far.
Despite the prospective automaker having gotten itself into trouble of late (not that Foxconn is lacking in terms of scandal), news of the deal caused Lordstown shares to increase by as much as 12 percent on Thursday evening. Bloomberg reported that the stock climbed by 8.4 percent during regular hours, closing at $7.98.
From Bloomberg:
The accord gives both companies something they badly need. Lordstown Motors gets a partner that will hasten the startup’s move into large-scale production, which will help lower the high costs required to make EVs. Foxconn gets a plant in North America where it can build its open-source electric vehicle platform and do contract manufacturing for partners like Fisker Inc.
“It’s less about a facility sale than a strategic partnership,” Lordstown Motors Chief Executive Officer Dan Ninivaggi said in an interview. “You have to find a way to get scale in the auto industry. Foxconn has a vision. They’ve got enormous capabilities in manufacturing and they will be able to fill that plant faster than we could.”
Foxconn’s manufacturing prowess is irrefutable and it’s likely the firm was responsible for manufacturing at least one gaming console, computer, or cell phone you’ve previously owned. It also appears to be getting the better deal here since Lordstown had grown vocally desperate over the summer. Finances had reached a point where the company no longer knew if it would be able to reach the production phase and it is currently under investigation by the Securities and Exchange Commission and Department of Justice over its deal to go public — in addition to some allegedly false or misleading statements made by former management, including company founder and ex-CEO Steve Burns.
While the partnership does provide the cash-strapped EV startup with more funding, Foxconn now owns its only manufacturing facility and has the ability to jumpstart vehicle production ahead of plans to assist Fisker (likely using the same facility).
On a longer timeline, this could bode similarly well for Apple’s sporadic interest in building an automobile. But it’s a little early to presume anything right now. We’ll be impressed if Lordstown Motors manages to adhere to its promise of delivering its pickup within the first half of 2022.
[Image: Lordstown Motors]
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