Foxconn buys Lordstown plant for production of electric vehicles | News, Sports, Jobs
LORDSTOWN – Lordstown Motors Corp., which announced just six weeks ago that it was in talks with partners to maximize the value of its auto plant, intends to sell the $ 6.2 million plant. square feet at Taiwanese tech giant Hon Hai Technology Group.
The companies have already entered into a $ 230 million master deal that excludes Lordstown Motors’ hub motor assembly line, battery module and packaging line assets, certain intellectual property rights and ‘other assets, while they negotiate a final agreement.
In addition, Hon Hai, which operates under the Foxconn name, agreed to immediately purchase approximately $ 50 million of Lordstown Motors’ common stock from the company for $ 6.89 per share.
In addition, the companies plan to negotiate a contract manufacturing deal that would allow Foxconn to manufacture Lordstown Motors’ flagship vehicle, the Endurance Truck, at the Lordstown plant.
The deal gives Lordstown Motors the opportunity to leverage Foxconn’s technology and manufacturing expertise as Lordstown Motors continues production of electric vehicles, according to the startup.
It also gives Foxconn, which makes Apple iPhones and other electronics, a US foothold in the electric vehicle space.
“The goal of the partnership is to present both Lordstown Motors and Foxconn with increased market opportunities in the production of scalable electric vehicles in North America,” a statement from the States of Lordstown Motors.
In addition, the “The facility would serve as a quick-to-market asset that would also support Foxconn’s partner and customer, Fisker Inc.” according to Lordstown Motors. Fisker is a California-based electric vehicle manufacturer.
The deal was announced Thursday night after a day of heavy speculation around the deal that pushed Lordstown Motors shares up 8.4%.
Lordstown Motors’ new CEO Daniel A. Ninivaggi said the relationship with Foxconn “Deliver operational, technological and supply chain advantages” at Lordstown Motors, to speed up large-scale vehicle production and increase employment at the plant.
“The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and profitable supply chain, while freeing up Lordstown Motors to focus on bringing Endurance to market, developing offerings of services for our fleet customers and the design and development of new innovative vehicles. models.”
The company has invested millions in the former General Motors auto plant to modernize it and produce battery-powered vehicles. But, it only uses about 30 percent of the facility.
Concurrent with the closing of a deal, Lordstown Motors would issue warrants to Foxconn exercisable on the third anniversary of closing for 1.7 million common shares at a price of $ 10.50 per share.
Once the deal was done, Lordstown Motors would enter into a long-term lease for part of the plant for its Ohio-based employees, and Foxconn would offer employment to the agreed Lordstown Motors operating and manufacturing employees.
In addition, the two companies have agreed to explore licensing agreements for additional pickup truck programs.
“We have high expectations of this partnership that we will be able to successfully integrate our resources with Lordstown Motors. In addition to meeting the goal of advancing our schedule to establish electric vehicle production capacity in North America, this also reflects Foxconn’s flexibility in providing design and production services for various electric vehicle customers. “, said Young Liu, chairman of the Hon Hai Technology Group.
Lordstown Motors continues to move forward on limited production of Endurance for test, verification and validation approvals for the remainder of this year and the first part of 2022. However, in light of the agreement with Foxconn, he said he would assess the impact of the manufacturing relationship contract on commercial production, supply chain opportunities with Foxconn and the integration of their operational teams.
The company plans to provide an update in mid-November on its third quarter financial call.
Lordstown Motors tried to attract new capital to pay for production on a commercial scale and launch Endurance.
He was able to strike a deal with a hedge fund that has the potential to inject $ 400 million into the company over three years, but followed that announcement in July with another warning the following month about its ability to stay in business. activity without additional operating funds. The most recent going concern notice was in the company’s second quarter financial report in August.
Lordstown Motors updated its 2021 financial outlook last provided in the second quarter financial call on Thursday.
Capital expenditure remains unchanged at $ 375-400 million, but selling, general and administrative expenses have increased from $ 95 million to $ 105 million to $ 105 million to $ 120 million, mainly due to legal and professional fees plus students.
Research and development expenses increased from $ 320 million to $ 340 million, from $ 310 million to $ 320 million, largely due to increased prototyping and pre-production costs.
The company’s cash balance fell from $ 210 million to $ 240 million, from $ 225 million to $ 275 million. This includes about $ 20 million from the issuance of common shares in August and September, but excludes the proceeds from Foxconn’s $ 50 million share purchase.
Guy Coviello, President and CEO of the Youngstown / Warren Regional Chamber, said the deal is a positive development for the Mahoning Valley.
“Lordstown Motors has a great new vehicle. Foxconn is a strong and well established company which can contribute considerable resources ”, said Coviello.
“In addition to using the assembly plant more, it increases supply chain opportunities for businesses in the Valley. It also gives our team the opportunity to attract suppliers who would be new to our market ”, he said.
U.S. Representative Tim Ryan, D-Howland, and U.S. Senator Sherrod Brown, D-Ohio, said the community needs information on Lordstown Motors’ plans.
“I am closely following reports that Foxconn may buy the old plant from GM Lordstown and look forward to hearing more from Lordstown Motors and Foxconn about their plans for the installation. I plan to meet with company officials soon to discuss what this decision means for jobs in our community and how it will help Mahoning Valley remain a leader in the production of electric vehicles. We deserve answers ”, Ryan said.
Said Matt Englehart, communications manager at JobsOhio, the state’s private economic development firm, “Electrification and mobility in the automotive industry is a top priority for Ohio and JobsOhio. We and our partners are optimistic that this state will become a world leader in this space and that the Mahoning Valley will play a vital role in this effort. It is not surprising that the Lordstown factory is attracting great interest. He is a vast and valuable asset surrounded by great talent at a time when the industry is moving from combustion to electrification.