Lordstown Motors is selling its eponymous factory to Taiwanese contract manufacturer Foxconn, the company that makes the iPhone for Apple, for US$230 million (A$318 million)
The two companies have reached a non-binding agreement, with the Taiwanese company – also known as Hon Hai Precision Industry Co – to purchase US$50 million (A$69.2 million) of Lordstown common stock at a price of US$6.89 per share.
The beleaguered electric vehicle startup bought the Ohio factory from General Motors in 2019 but is currently using only 30 per cent of the plant’s 5.75 million square metres.
Its first product, the Endurance electric pickup, will endure as Foxconn will be tasked with bringing it to production.
The US startup will lease a portion of the facility for its Ohio-based employees, while Foxconn says it’ll offer jobs to many of them.
Lordstown had previously vowed to plough on even as its CEO and CFO resigned in June amid allegations surrounding pre-orders for the company’s first vehicle, the electric Endurance pickup.
A new CEO, Daniel Ninivaggi, was appointed in August.
“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,” said Mr. Ninivaggi.
The company is facing a probe from the US Securities and Exchange Commission (SEC) regarding its merger with a special-purpose acquisition company (SPAC) and statements it had made about the number of pre-orders it had received.
It had said it was in talks to build vehicles for other automakers or, at the very least, lease space in its factory to other companies, but hadn’t publicly indicated it was looking to sell the Ohio plant.
Another name in the mix is Fisker, the second car company of Henrik Fisker, which announced in May 2021 it would have Foxconn build cars for it in the US from 2023.
It has yet to be confirmed whether these will be produced at Lordstown.
This new model, codenamed Project Pear, is separate to the previously revealed Ocean SUV that Magna Steyr will build for it in Europe from late 2022.
It uses a new lightweight platform called FP28 and will be sold in markets like North America, Europe, China and India, with plans to produce it outside the US as well.
Fisker is projecting annual production volumes of more than 250,000 units across multiple sites and targeting a base price in the US of less than US$30,000 before incentives, narrowly undercutting the Nissan Leaf.
Foxconn also wants to build a vehicle of its own, using its new MIH electric architecture, as it seeks to become the “Android of EV” to Tesla’s “iPhone of EV”.
A large sedan has already been spied, believed to be the first Foxconn model.
According to Foxconn, its architecture can have a wheelbase between 2750mm and 3100 mm, and supports a variety of track and ride heights, making it suitable for sedans, hatches, crossovers, and people movers.
Battery packs with 93kWh, 100kWh and 116kWh can be installed. A variety of electric motors can be employed at both ends, with the initial offering consisting of 95kW, 150kW and 200kW front motors, and 150kW, 200kW, 240kW and 340kW units for the rear axle.
In order to bring the Android model to electric vehicles, Foxconn plans to make the architecture open to auto manufacturers to access, program and modify.
The company has already announced plans to build cars for Fisker and Geely.
By making its components available to use off-the-shelf, Foxconn is hoping to dramatically reduce the costs of developing and designing new electric cars.
Foxconn hasn’t been without controversy.
The contract manufacturer, which has manufactured iPhones for Apple, was the subject of an exposé by The Verge.
It acquired a large swath of land in Wisconsin, with numerous houses being demolished under eminent domain, to build an LCD factory and create 13,000 jobs.
Instead, after around two years its complex is mostly unfinished, producing nothing, and reportedly hiring people just to meet tax subsidy quotas.
In all, Foxconn reduced its planned investment from US$10 billion (A$13.84b) to just US$672 million (A$930m) and cut the number of jobs to 1454.
General Motors agreed to invest US$75 million (A$103m) in Lordstown in August 2020, which included the plant and equipment valued at US$20 million (A$27.68m).
The company has already gone public through a merger with DiamondPeak Holdings in October 2020, which saw the start-up valued at US$1.6 billion (A$2.2b).
But The New York Times reports it has burned through much of the cash it raised from investors at that time, while the start date for Endurance production has been pushed out further and further.
It’s now slated to enter production in the “first part of 2022”, albeit not for customer orders.
While GM is charging ahead with its electric vehicle roll-out, its involvement with EV start-ups has been less than stellar.
Lordstown is foundering, while Nikola was a high-profile disaster with its CEO Trevor Milton charged with fraud. After allegations surfaced about his actions, GM scrapped its plans to invest in the company.