And Lordstown Motors gets a much-needed $230 million lifeline
Foxconn has officially agreed to buy the former General Motors plant in Lordstown, Ohio from struggling EV startup Lordstown Motors, giving the iPhone assembler its first automotive factory and a second chance at establishing a manufacturing foothold in the United States. The Taiwanese conglomerate has spent the last year buying up or partnering with companies in the electric vehicle space in a massive effort to diversify away from laptops and smartphones.
The two companies announced Wednesday that they’ve agreed to the framework deal first announced in September, meaning Foxconn will pay Lordstown Motors $230 million for the 6.2-million-square-foot factory. Foxconn has also agreed to contract manufacture Lordstown Motors’ electric pickup truck, the Endurance. The deal is expected to close by the end of April next year, and it has to be approved by the Committee on Foreign Investment in the United States.
The startup bought the plant from GM in 2019 months after the leading US automaker had shuttered it — a decision that drew the ire of then-President Donald Trump. Trump pumped up Lordstown Motors’ effort to buy the factory in May 2019, saying in a tweet that it was “GREAT NEWS FOR OHIO!” After that, Lordstown Motors became something of a darling of the Trump administration. It was invited to the White House for an event, and Mike Pence appeared at the event where the startup revealed the Endurance.
Lordstown Motors desperately needs the money
Lordstown Motors has struggled mightily since, though, despite raising nearly $700 million when it went public in late 2020. It is currently under investigation by both the Securities and Exchange Commission and the Department of Justice after a short-selling research firm raised allegations of fraud. A number of executives have resigned, including president Rich Schmidt, which Lordstown Motors announced Wednesday morning. The startup had said earlier this year that it would run out of cash in May 2022 without more funding.
The Ohio factory is the second location where Foxconn overlaps with Trump. The first was in Wisconsin, where Trump touted Foxconn’s planned LCD factory as the “eighth wonder of the world.” The plans for that factory have been dramatically revised down in scope ever since, though, and Foxconn has done little more at the location than raze acres of land and put up some empty buildings.
Lordstown Motors will continue to rent space in the Ohio factory, but just 30,000 square feet, according to a regulatory filing. The startup announced Wednesday that will work with Foxconn to develop vehicles on the Taiwanese conglomerate’s new EV platform. Another EV startup, Fisker Inc., will use some space in the factory, too, to build an electric vehicle with Foxconn.
Lordstown Motors said earlier this year that it had already spent $240 million updating the factory to get it ready to build the Endurance. The startup will also get to keep its electric motor production line, as well as its battery module and pack assembly lines. In addition, “certain manufacturing and operational [Lordstown Motors] employees will become employees of Foxconn.”
Update 8:55PM ET: Added details from a new stock exchange filing about the deal.
