Lordstown sells Ohio plant to Foxconn in $ 280 million deal
(Bloomberg) – Lordstown Motors Corp. has agreed to partner with Foxconn Technology Group in a $ 280 million deal in which the startup sells its former General Motors Co. plant in Ohio to the Taiwanese company in exchange for money all by receiving a capital investment.
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Under the deal, Lordstown Motors will sell the Lordstown plant to Foxconn for around $ 230 million after buying it from GM for just $ 20 million two years ago. IPhone maker Apple Inc. will buy $ 50 million in common stock from its new partner and assemble the Lordstown Endurance electric van. The agreement is conditional on the two parties reaching an agreement on the manufacture of the vehicle. Foxconn plans to launch mass production in April, according to a person familiar with its schedule.
Lordstown shares jumped 12% when New York trading ended on Thursday. During normal trading hours, the stock rose 8.4%, closing at $ 7.98 after Bloomberg earlier announced that a deal was underway. It is still down 60% for the year.
The deal gives both companies something they badly need. Lordstown Motors obtains a partner who will accelerate the startup’s transition to full-scale production, which will help reduce the high costs required to manufacture electric vehicles. 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.
“This is less a sale of facilities than a strategic partnership,” Lordstown Motors CEO Dan Ninivaggi said in an interview. âYou have to find a way to get bigger in the auto industry. Foxconn has a vision. They have tremendous manufacturing capabilities and they will be able to fill this plant faster than us.
The two companies are working on a manufacturing pact that would accept a certain cost base for the Endurance pickup. Lordstown Motors would pay additional costs, Ninivaggi said. Foxconn will make the $ 50 million stock investment immediately, regardless of what happens with the talks for an assembly partnership.
The CEO said Lordstown Motors would keep its assembly lines that make the hub motors for each wheel in the Endurance as well as the chain that assembles the battery for the pickup.
Lordstown is racing to put its Endurance pickup into production early next year. While the truck is well received by customers, the company won’t be making full use of its Ohio plant anytime soon. So selling the facility and running alongside Foxconn could help the company better leverage the plant where GM employed 10,000 people at its peak.
The company ousted Steve Burns, its founder and CEO, in June for inaccurate statements he made about Endurance orders. Lordstown has repeatedly warned that its status as a going concern was in doubt less than a year after it merged with a special purpose acquisition company to go public.
Burns’ successor Ninivaggi said in an interview last month that he was looking for partners to help the company take full advantage of a factory that was once the largest industrial employer in the Mahoning Valley. He added that he was exploring all options for fundraising.
Lordstown Motors has been the subject of investigations by the United States Securities and Exchange Commission and the Department of Justice after an internal investigation concluded that the previous management had made inaccurate statements about Endurance’s pre-orders . The company is pushing to start deliveries of the pickup next year.
GM’s 2018 decision to shut down the plant was a blow to then-President Donald Trump, who a year earlier had discouraged rally fans in the area from selling their home due to all the jobs he had promised to bring back. Democrats have taken development as a symbol of the broken promises Trump made to voters in a key battlefield state.
Betting on electric vehicles
Foxconn, meanwhile, hopes to replicate the success of its smartphone by building its customers’ electric vehicles from the chassis. He is rapidly expanding his EV business as big tech companies from Apple to Xiaomi Corp. invest heavily in new generation mobility technologies. Over the past year, the Taiwanese company has launched an open platform of electric vehicles, signed a manufacturing agreement with Fisker, and formed a partnership with Thai state conglomerate PTT Pcl.
Earlier this year, Chairman Young Liu of Foxconn’s flagship unit, Hon Hai Precision Industry Co., said the company plans to establish an electric vehicle manufacturing plant in Wisconsin as the first automotive outpost. American. With Foxconn boosting its automotive power, it is seen as a contender in the electric vehicle manufacturing race for Apple.
The company has had a controversial history of bringing its manufacturing capabilities to the United States. This vision was never realized, and Liu said earlier this year that he was trying to figure out what to do on the spot.
Foxconn will rely on Ohio as the main electric vehicle manufacturing base in North America, while the company will continue to invest in Wisconsin as a key site for tech products, according to a person familiar with the plans.
One of the projects Foxconn will build at the Lordstown plant is Fisker’s Pear Project, which stands for Personal Electric Automotive Revolution, said Henrik Fisker, CEO of the company, in an interview. This model is expected to go into production in the first quarter of 2024 with an expected minimum production of 150,000 vehicles per year, eventually rising to 250,000 per year, he said.
Fisker’s CEO said he didn’t want to reveal too much about his company’s Project Pear design except to say that it will target young city dwellers and sell for a starting price of less than $ 30,000.
âIt doesn’t have a normal trunk or hatch,â he said. âIt’s basically about delivering a really cool vehicle that might excite the new generation of buyers, but that fits their lifestyle and budget. It would get people out of a Toyota Prius or a BMW X1.
(Updates with production information in the second paragraph and Foxconn’s US plans in the 16th paragraph)
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