Lordstown Motors Corp. (Nasdaq: RIDE), a provider of electric light-duty trucks focused on the commercial fleet market, and Foxconn (TWSE: 2317), the world’s largest electronics manufacturer, today announced a definitive Asset Purchase Agreement (APA) regarding Lordstown Motor’s facility in Lordstown, Ohio.
As reported earlier, on September 30th Lordstown Motors entered into an Agreement in Principle, or AIP, with an affiliate of Foxconn to work jointly on Lordstown Motors’ electric vehicle programs in the production and assembly plant in Lordstown, Ohio. Shortly after the AIP, Foxconn purchased $50 million of common stock directly from Lordstown Motors at a price of $6.8983 per share.
Under the definitive Asset Purchase Agreement, Lordstown Motors has agreed to sell to Foxconn the Lordstown facility, excluding certain assets such as the hub motor assembly line and battery module and pack lines, for $230 million. The two have also agreed to pursue a contract manufacturing agreement for the Endurance pickup truck.
One more victory for the MIH initiative
In addition, Lordstown Motors and Foxconn will pursue a joint venture agreement to co-design and develop vehicle programs for the global commercial fleet market, using the MIH open platform. Lordstown and Foxconn would have the right to commercialize these new EV programs in North America and internationally.
At 6.2 million square feet, and 640 acres, the Lordstown Complex was one of the largest internal combustion engine automotive plants in North America. It is now being converted into a state-of-the-art EV manufacturing facility. Foxconn has already announced that the Fisker PEAR program is intended to be manufactured in Lordstown.
Lordstown Motors and all OEMs whose vehicles are built at the plant will also benefit from the increased capacity utilization, while sharing common components and overhead costs. The use of shared space, in addition to the MIH open platform, provides smaller and more specialized OEMs the opportunities to scale up production without being a large, fully integrated automaker.
Supply chain management a key strength
Finally, the partnership with Foxconn should enable Lordstown Motors to significantly reduce its raw material, component and other input costs. As the world’s largest contract manufacturers, Foxconn will bring to bear the purchasing power, supply chain network, and logistics capabilities to significantly reduce vehicle production costs, and mitigate supply chain risks. Lordstown Motor also stands to benefit from Foxconn’s expertise in hardware software integration – critical to EVs – given their experience as a multinational electronics manufacturer.
In early October, Foxconn just unveiled the latest progress of its grandiose EV project: three working EV prototypes were showcased to demonstrate how far Foxconn had gone ever since declaring its EV ambition in 2020. It was quickly followed by another demonstration of Foxconn’s Open EV Software Platform, developed with Arm and Microsoft.