Lordstown Motors finalizes factory sale to Foxconn
Lordstown Motors purchased the Ohio plant in 2019 from General Motors for $20M
Lordstown Motors has closed a deal to sell its 6.2 million-square-foot Ohio factory to Foxconn for $230 million plus the reimbursement of approximately $27 million in operating and expansion costs.
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The deal gives Lordstown Motors a much-needed lifeline after burning through nearly all the cash raised during its merger with special purpose acquisition company DiamondPeak Holdings in October 2020. If the sale wasn’t completed before May 18, Lordstown would have had to pay back a $200 million deposit put down by Foxconn.
As part of the deal, Foxconn previously purchased $50 million of Lordstown's Class A common stock.
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Lordstown Motors purchased the Ohio plant in 2019 from General Motors for $20 million, with the help of a $40 million loan from GM.
Lordstown Motors associates work on a pre-production all electric pickup truck, the Endurance, at the Lordstown Assembly Plant in Lordstown, Ohio, U.S., June 21, 2021. REUTERS/Rebecca Cook (REUTERS/Rebecca Cook / Reuters)
Foxconn will assume manufacturing operations of the Lordstown plant immediately with no interruptions to production. Approximately 400 Lordstown Motors employees will transition to employment with Foxconn.
Lordstown Motors emphasized it would retain a presence in Ohio along with engineering and technical centers, as well as corporate staff, in Farmington Hills, Michigan, and Irvine, California.
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Under its new manufacturing supply agreement with Foxconn, Lordstown's all-electric Endurance pickup truck is slated to begin commercial production in the third quarter, with the first deliveries expected in the fourth quarter.
Lordstown Motors Corp and Foxconn have entered into a manufacturing supply agreement for Lordstown Motors' Endurance truck, which will start commercial production in the third quarter of this year with the first delivers expected in the fourth quarte (Lordstown Motors/Lisa Acierno/Handout via REUTERS / Reuters)
In addition to the proceeds from the factory sale, Lordstown Chief Financial Officer Adam Kroll said during the company's first-quarter earnings call on Monday that it would need to raise an additional $150 million in capital prior to the start of Endurance's commercial production.
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Foxconn and Lordstown have also agreed to form a joint venture known as MIH EV Design LLC to co-develop electric vehicles using Foxconn's Mobility-in-Harmony (MIH) platform. Vehicles developed by MIH EV Design will be built at the Lordstown, Ohio, plant and at other Foxconn contract-manufacturing locations around the world.
The joint venture will allow users of Foxconn's MIH platform, manufacturing footprint and supply chain to achieve production at scale at lower volumes with a shorter time to market. Meanwhile, the agreement will provide Lordstown Motors with a scalable vehicle development platform in North America that will increase the breadth of its product portfolio while reducing product development costs.
Foxconn will own 55% of MIH EV Design, while Lordstown will own 45%. Foxconn has committed $100 million to the venture, including a $45 million loan to Lordstown to support its initial capital commitment.