Topline
Lordstown Motors, an electric truck manufacturer, plans to sell the former GM factory in eastern Ohio that it tried to revive to Foxconn, a Taiwan-based manufacturing company. This is a significant move for Foxconn in the U.S. and a possible solution to Lordstowns financial woes.
Lordstown Motors, where GM used to operate, is located in Lordstown (Ohio) on October 16, 2020. AFP via Getty Images
The Key Facts
Foxconn announced Thursday afternoon that it had agreed to purchase Lordstown Motors' factory for $230million. The contract will allow Foxconn to manufacture the upcoming Endurance electric pickup truck. Lordstown also plans to lease part of the factory. Foxconn agreed that it would purchase Lordstown Motors shares worth $50 million. Foxconn plans to use the factory to speed up the market for Fisker Inc. (another aspiring electric carmaker who partnered with Foxconn) and hope to begin production on a lower cost vehicle in the future.
Important Quote
Lordstown Motors would be able to benefit from Foxconn's manufacturing expertise and cost-efficient supply chains. This will allow Lordstown Motors the freedom to concentrate on bringing the Endurance onto market, designing service offerings for fleet customers, and creating innovative new vehicle models. Lordstown CEO Daniel Ninivaggi stated in a Thursday statement.
Important Background
Lordstown Motors bought the Ohio plant of General Motors two years ago for $20 million. They plan to use the factory to launch an electric truck line. Since then, the company has been facing financial difficulties. It plans to begin delivering trucks next year but Lordstown Motors told investors this summer that its ability to continue operating as a going concern is in danger and may need additional funding to accelerate production. Hindenburg Research, a short-seller, also accused the company of misleadingly claiming that it had an order backlog earlier in the year. The Securities and Exchange Commission and the U.S. Attorneys Office in the Southern District are investigating the company's pre-orders and its plan to go public through a merger with DiamondStar, Lordstown revealed in July.
Tangent
Foxconn's U.S. plans could be supported by the factory acquisition. Foxconn announced plans in 2017 to invest billions of dollars in a large electronics factory in Wisconsin. This deal was praised by former President Donald Trump. However, the company has dramatically reduced the scope of the project. Foxconn and Fisker had considered building its electric car on the Wisconsin property. However, the ban in Wisconsin on direct-to consumer auto sales proved to be a major obstacle. Henrik Fisker, cofounder of Fiskers and CEO of the company, said that the signing this agreement is another significant step in Fiskers commitment for volume manufacturing in the United States.
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Fisker EV plans for underused Foxconn site hit snag on Wisconsin Auto Sales Rules (Forbes).
