Lordstown, Ohio-based Lordstown Motors Corp. has announced reaching an agreement in principle with Taiwan-based Hon Hai Technology Group (also known as Foxconn) to work jointly on Lordstown Motors’ electric vehicle (EV) programs at Lordstown Motors’ 6.2 million square foot production and assembly plant in that northeast Ohio city.
As part of the agreement, the two companies say they “will use commercially reasonable best efforts to negotiate a definitive agreement [in] which Foxconn would purchase the Lordstown facility, excluding Lordstown Motors’ hub motor assembly line, battery module and packing line assets, certain intellectual property rights and other excluded assets, for $230 million.”
If completed, the agreement would provide Foxconn with a North American presence in the EV light-duty commercial fleet truck market. Hon Hai, under the Foxconn brand, has become one of the 25 largest companies in the world (coming in at number 22 on this year’s Fortune Global 500 list) primarily because of its contract manufacturing services in the computer, telecom and electronics sectors.
Lordstown Motors, meanwhile, encountered trouble earlier this year when its former executive team seemingly embellished the volume of pre-orders for the company’s Endurance EV pickup truck.
“We have high expectations through this partnership that we will be able to successfully integrate our resources with Lordstown Motor,” states Young Liu, chair of Hon Hai Technology Group. “In addition to achieving the goal of moving ahead our timeline to establish EV production capacity in North America, it also reflects Foxconn’s flexibility in providing design and production services for different EV customers. This mutually beneficial relationship is an important milestone for Foxconn’s EV business and our transformation strategy. I believe that the innovative design of the [Lordstown] Endurance pickup truck, with its unique hub motors, delivers an advantageous user experience and has manufacturing efficiencies. It will undoubtedly thrive under our partnership and business model.”
The parties describe the agreement as non-binding and subject to the negotiation and execution of definitive agreements. A related agreement has Foxconn purchasing approximately $50 million of Lordstown Motors’ common stock directly from Lordstown Motors.
The companies say they intend to negotiate a contract manufacturing agreement whereby Foxconn would manufacture Lordstown Motors’ Endurance full-size pickup truck at its Lordstown facility. Lordstown Motors would also agree to provide Foxconn “with certain rights with respect to future vehicle programs.”
The companies say they also have agreed to “explore licensing arrangements for additional pickup truck programs.”
Should the definitive agreements be finalized, Lordstown Motors would enter into a long-term lease for a portion of the existing facility and Foxconn would offer employment to “agreed-upon Lordstown operational and manufacturing employees.”
Adds the companies, “In addition, [the Lordstown] facility would serve as a ‘speed to market’ asset that would also support Foxconn’s partner and customer, [California-based] Fisker Inc.”
Comments Daniel Ninivaggi, CEO of Lordstown Motors, “We are excited about the prospect of joining forces with a world-class smart manufacturer like Foxconn and believe the relationship would provide operational, technology and supply chain benefits to our company and accelerate overall scaled vehicle production and increase employment in the Lordstown facility. The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and cost-efficient supply chain, while freeing up Lordstown Motors to focus on bringing the Endurance to market, developing service offerings for our fleet customers and designing and developing innovative new vehicle models.”
Investments in EV production are being closely watched by auto dismantlers and by auto shredder operators, with both sectors likely to make changes to their business models when EVs become more common in the end-of-life vehicle (ELV) stream.