Lordstown Motors Corp. (LMC), a provider of electric light-duty trucks for commercial fleets, and electronics maker, Hon Hai Technology Group, have entered into a purchase agreement regarding LMC’s facility in Lordstown, Ohio.
As previously announced on Sept. 30, LMC agreed in principle with an affiliate of Hon Hai Precision Industries, also known as Foxconn, to work jointly on LMC’s electric vehicle programs in the production and assembly plant in Lordstown. Shortly after the Sept. 30 agreement, Foxconn purchased $50 million of common stock directly from LMC at a price of $6.90 per share.
LMC and Foxconn have agreed to pursue a manufacturing agreement for the Endurance pickup truck, which must be entered into before closing—currently targeted by April 30.
LMC agreed to sell to Foxconn the Lordstown facility, excluding certain assets such as the hub motor assembly line and battery module and pack lines, for $230 million. Foxconn will make a down payment of the purchase price of $100 million by Nov. 18 and subsequent down payments of $50 million each on Feb. 1 and no later than April 15. The balance of the purchase price will be paid at closing on April 30.
Lordstown Motors and Foxconn will agree to co-design and develop vehicle programs for the global commercial fleet market, using the MIH open platform. Lordstown and Foxconn would have the right to commercialize these new EVs in North America and overseas.
Upon the closing, Foxconn will receive 1.7 million warrants to acquire Lordstown common stock, exercisable for three years, at a price of $10.50 per share.
“This partnership marks the commencement of integrating our resources with Lordstown Motors to develop Ohio into Hon Hai’s most important electric vehicle manufacturing and R&D hub in North America,” said Young Liu, chairman of Hon Hai Technology Group.
“We are happy to have formed a strategic partnership with a company as innovative and forward-thinking as Foxconn," Daniel Ninivaggi, CEO of Lordstown Motors, added. "I believe in their EV strategy and look forward to substantial collaboration in the future. In my view, this transaction provides LMC a better opportunity to fulfill its original mission of satisfying the growing demand for electric vehicles, particularly in the underserved commercial market, with a more flexible business model.”
The partnership may quicken the Lordstown plant’s ability to get up to scale for EV R&D and production. At 6.2 million square feet and 640 acres, the plant was one of the largest internal combustion engine automotive plants in North America. It’s now being converted to make the Endurance EV.
Production on the Endurance pickup was supposed to start this fall and was being promoted as the first to enter the U.S. market.
Lordstown Motors and all OEMs whose vehicles are built at the plant will benefit from the increased capacity utilization, possible use of common components and shared overhead costs. The use of shared space and the MIH open platform provides smaller, more specialized OEMs the opportunity to achieve the benefits of scale without being a large, fully integrated automaker.
Finally, the partnership with Foxconn should enable Lordstown Motors to significantly reduce its raw material, component and other input costs, officials said in a release. As one of the largest contract manufacturers globally, Foxconn will bring to bear the purchasing power, supply chain network, and logistics capabilities to significantly reduce vehicle production costs and mitigate supply chain risk.
