Electric Truck News: Taiwan's Foxconn iPhone Maker Buys Failing Lordstown Ohio Electric Truck Plant
SEE ALSO: EV's Are Only Built On Wall Street
ABC News reported that the agreement with Lordstown gives Foxconn a sprawling manufacturing site where GM built cars for more than 50 years before closing the plant in 2019. At its peak, the factory was home to roughly 10,000 workers.
Lordstown promised to revive the plant after acquiring it in 2019 and had planned to begin production of its marquee Endurance pickup truck in September. Its investors include GM, which took a 5% stake.
Global technology firm Foxconn and startup Lordstown Motors Corp said Friday they plan to pursue a U.S. Energy Department loan from a program to help pay for the costs of retooling a factory to build electric trucks. (WTF?>Partnership to work jointly on scalable electric vehicle programs at Lordstown Motors’ assembly plant in Ohio
Lordstown Motors Corp. (“Lordstown Motors”) , a provider of electric light duty trucks focused on the commercial fleet market, and global technology company Hon Hai Technology Group (“Foxconn”) (TWSE: 2317), today announced that it has reached an agreement in principle to work jointly on Lordstown Motors’ electric vehicle programs in Lordstown Motors’ 6.2 million square foot production and assembly plant in Lordstown, Ohio. Beyond certain customary provisions, the Agreement is non-binding and subject to the negotiation and execution of definitive agreements. The parties on the same date have entered into a subscription agreement, under which Foxconn will purchase approximately $50 million of Lordstown Motors’ common stock directly from Lordstown Motors at a price of $6.8983 per share, the average daily volume adjusted price over the past 15 trading days prior to the execution of the Agreement in Principle. Foxconn has agreed to retain these shares for a specified period.
The agreement between both companies would allow Lordstown Motors to leverage the technology and manufacturing expertise of Foxconn, as Lordstown Motors pursues the production of electric vehicles at its Ohio facility. The goal of the partnership is to present both Lordstown Motors and Foxconn with increased market opportunities in scalable electric vehicle production in North America.
The Agreement provides as follows:
● Lordstown Motors and Foxconn will use commercially reasonable best efforts to negotiate a definitive agreement pursuant to which Foxconn would purchase the Lordstown facility, excluding Lordstown Motors’ hub motor assembly line, battery module and packing line assets, certain intellectual property rights and other excluded assets, for $230 million.
● Both entities would also negotiate a contract manufacturing agreement, which would be a condition to closing of the facility purchase, whereby Foxconn would manufacture Lordstown Motors’ Endurance full-size pickup truck at its Lordstown facility. Lordstown Motors would also agree to provide Foxconn with certain rights with respect to future vehicle programs.
● Concurrently with the closing under the definitive agreements, Lordstown Motors would issue warrants to Foxconn that are exercisable until the third anniversary of the closing for 1.7 million shares of common stock at an exercise price of $10.50 per share.
● The parties have agreed to explore licensing arrangements for additional pickup truck programs.
● Following the closing under the definitive agreements, Lordstown Motors would enter into a long-term lease for a portion of the existing facility for its Ohio-based employees, and Foxconn would offer employment to agreed upon Lordstown operational and manufacturing employees.
Young Liu, Chairman of Hon Hai Technology Group, commented “We have high expectations through this partnership that we will be able to successfully integrate our resources with Lordstown Motors. In addition to achieving the goal of moving ahead our timeline to establish electric vehicle production capacity in North America, it also reflects Foxconn’s flexibility in providing design and production services for different EV customers. This mutually beneficial relationship is an important milestone for Foxconn’s EV business and our transformation strategy. I believe that the innovative design of the Endurance pickup truck, with its unique hub motors, delivers an advantageous user experience and has manufacturing efficiencies. It will undoubtedly thrive under our partnership and business model.”
In addition, this facility would serve as a speed to market asset that would also support Foxconn's partner and customer, Fisker Inc.
Daniel Ninivaggi, Chief Executive Officer of Lordstown Motors Corp., stated “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. 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.”
In connection with the Foxconn announcement, today Lordstown Motors also provided an updated financial and production outlook.
WASHINGTON/DETROIT, Sept 30 (Reuters reported that global technology firm Foxconn will buy an assembly plant owned by U.S. electric vehicle startup Lordstown Motors Corp for $230 million and take over production of a new pickup truck, the companies said on Thursday.
Under the in-principle agreement, the Taiwanese tech giant, also known as Hon Hai Precision Industry Co. will manufacture Lordstown Motors’ Endurance full-size pickup truck at its Lordstown facility and it will also support Foxconn's partner and customer, start-up automaker Fisker Inc.
Young Liu, Chairman of Foxconn, said the deal would help Foxconn achieve "the goal of moving ahead our timeline to establish electric vehicle production capacity in North America."
Foxconn, the world's largest contract electronics maker best known for assembling Apple's iPhone, will invest $50 million in Lordstown equity. Lordstown Motors plans to enter into a long-term lease for a portion of the existing facility for its Ohio-based employees, and Foxconn plans to offer employment to many Lordstown employees.