Foxconn Acquires Lordstown Motors Factory for $230M | Electric Vehicle Production

Foxconn Acquires Lordstown Motors' Ohio Factory

Lordstown Motors, an electric light-duty truck manufacturer, has finalized the sale of its 6.2-million-square-foot production facility located in Lordstown, Ohio, to Foxconn, a Taiwanese hardware company renowned for its production of the Apple iPhone.

Deal Details and Timeline

The transaction, valued at $230 million, is anticipated to be completed by the end of April of the following year, as stated by Lordstown Motors. This aligns with the initial agreement reached between the two companies on September 30th.

Following the preliminary agreement, Foxconn immediately invested $50 million in Lordstown common stock, acquiring shares at a price of $6.8983 each.

The payment schedule includes a $100 million down payment due by November 18th, with subsequent installments of $50 million in February and April. The final closing of the deal is currently targeted for April 30, 2022.

Manufacturing and Joint Venture Plans

Foxconn has also committed to exploring a contract manufacturing agreement with Lordstown, aiming to assist in the production of the Endurance pickup truck.

Furthermore, the companies intend to establish a joint venture focused on the collaborative design and development of commercial fleet vehicle programs for both North American and international markets.

Upon completion of the sale, Foxconn will receive 1.7 million warrants, granting them the option to purchase Lordstown common stock at $10.50 per share over the next three years. Lordstown will retain ownership of its electric motor production line, as well as its battery module and pack assembly lines.

Foxconn's Expansion into Automotive Manufacturing

Earlier in the year, Foxconn entered into an agreement with Fisker, an electric vehicle startup, to jointly develop and manufacture its new vehicle under the PEAR program in North America.

Foxconn has indicated that Fisker’s vehicles will also be produced at the Ohio facility, which Lordstown originally acquired from General Motors in 2019. This acquisition marks Foxconn’s first foray into automotive manufacturing, representing a significant expansion beyond its core business of phones and laptops.

Challenges for Lordstown Motors

Lordstown Motors is currently facing investigations from both the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ), stemming from allegations of fabricated EV truck pre-orders made by a research firm.

The company is also grappling with financial difficulties and the departure of key executives, including President Rich Schmidt, who resigned recently. This deal is expected to potentially alleviate some of Lordstown’s financial strain by reducing costs associated with raw materials and components.

Foxconn’s robust supply chain network, logistical capabilities, and purchasing power are anticipated to contribute to lower production costs and improved management of supply chain volatility. Moreover, Foxconn’s expertise in software-hardware integration is considered crucial for the development of electric vehicles.