Troubled Lordstown Motors may have found a solution in the form of China’s Foxconn, selling most of its Ohio plant to the company for $230 million. Foxconn also bought $50 million worth of stock in the battery-electric pickup maker.
The deal does exclude “Lordstown Motors’ hub motor assembly line, battery module and packing line assets, certain intellectual property rights and other excluded assets,” according to the EV company.
Additionally, the companies agreed Foxconn will ultimately take over manufacturing Lordstown’s Endurance pickup and get first chance to produce future vehicles for Lordstown.
“We are excited about the prospect of joining forces with a world-class smart manufacturer like Foxconn and believe the relationship would provide operational, technology and supply chain benefits to our company and accelerate overall scaled vehicle production and increase employment in the Lordstown facility,” said Daniel Ninivaggi, who signed on as chief executive officer of Lordstown Motors Corp. a little more than a month ago.
“The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and cost-efficient supply chain, while freeing up Lordstown Motors to focus on bringing the Endurance to market, developing service offerings for our fleet customers and designing and developing innovative new vehicle models.”
The deal seemingly resolves issues for both parties. Lordstown’s financial struggles are well documented and despite some additional investors joining its ranks in recent months, speculation still swirled about the company’s viability.
As a result of the agreement, the company updated its financial outlook and production plans. The company increased its expected SG&A expenditures as well as its research and development spend by a combined $35 million due to rising costs for legal fees, prototyping and other expenses.
However, its cash balance may drop to between $210 million and $240 million due to its payout of $20 million of common stock related to the company’s equity purchase agreement. The good news is that will be offset by Foxconn’s $50 million stock purchase — in short, there’s a cash infusion that will further stabilize Lordstown’s operations.
It also gives Foxconn the foothold in the U.S. it has been seeking for much of the past year. Foxconn Chairman Liu Young-way told reporters in March, the company was considering building an EV in Wisconsin. It already invested $10 billion into the site that was supposed to build televisions in Mount Pleasant, Wisconsin in 2017. It sits largely idle now. However, he also noted that Mexico was a possibility.
Moving from iPhones to iCar?
The Wisconsin plans haven’t come to fruition, but Foxconn needed to do something because it’s got a deal in place to build nascent EV maker Fisker Inc.’s second vehicle, after the Ocean, which is being produced by Magna.
Currently dubbed Project PEAR, which stands for Personal Electric Automotive Revolution, calls for producing a battery electric vehicle that will costs less than $30,000 by 2023. Plans call for Fisker to work with Foxconn on a new lightweight platform designated “FP28,” leveraging technological expertise from each company to support project and potential future vehicles.
That vehicle now looks like it will be built at the Lordstown facility, at least according to Henrik Fisker, head of the EV maker.
“A long exciting day!” he tweeted. “I talked to the chairman of Foxconn today; we agreed: Foxconn’s announcement today about its new EV manufacturing plant in Ohio could mean an earlier launch of the PEAR.”
What isn’t being spoken about is the what other products could be coming in the future. Foxconn, which is best known for producing iPhones for Apple, could also look to partner up with Apple on another project — Apple’s much rumored car. Dubbed Project Titan, the personal technology giant has been talking with a few automakers about moving from the drawing board to the assembly line, including Hyundai Motor Group most recently.
Could an established relationship with Foxconn and available plant space finally bring the iCar or whatever it may be named to life?