Lordstown Motors in Talks to Sell its Ohio EV Factory to Foxconn
【Summary】Electric truck startup Lordstown Motors is reportedly in talks to sell its Ohio factory that it acquired from automaker General Motors to Taiwan contract manufacturer Foxconn, which is best known as the assembler of Apple’s iPhone.
Electric truck startup Lordstown Motors was once viewed as a promising startup with its rugged electric pickup trucks targeting the commercial market. The company launched its U.S. IPO last October in a high profile merger with blank-check company Diamond Peak Holdings. Lordstown's shares trade on the Nasdaq.
However, Lordstown's success was short-lived. The company's founder and Chief Executive Steve Burns was accused of misleading investors by inflating the number of orders it had for its electric pickup named the Endurance.
Lordstown Motors claimed that it had more than 100,000 preorders for the Endurance pickup worth a total of $1.4 billion, which wasn't true. With a falling stock price, the fallout led to the sudden resignation of Burns along with Chief Financial Officer Julio Rodriguez in June, leaving the company's future uncertain.
Now Lordstown is reportedly in talks to sell its Ohio EV factory that it acquired from General Motors to Taiwan contract manufacturer Foxconn, which is best known as the assembler of Apple's iPhone. The possible deal was reported by Bloomberg.
Lordstown and Foxconn could announce a deal as soon as this week, Bloomberg reported, citing unnamed people familiar with the matter.
In Nov 2018, GM announced plans to close four U.S. plants, including its Lordstown, Ohio facility, which produced the Chevy Cruze sedan. The plant's closure was part of GM's restructuring plan to trim expenses, including a shift from building sedans to more profitable SUVs and pickups.
Rather than let the plant sit idle, GM agreed to loan Lordstown Motors up to $40 million to retool the plant and get it ready for electric vehicle production, so the company could begin its ambitious plan of building the Endurance pickup. But Lordstowns plans have beens stalled as it runs low on cash since the sudden departure of its founder Burns in June.
In a quarterly regulatory filing in March, the company claimed that the $587 million in cash, which its said wasn't enough to begin production of its commercial truck.
Foxconn, on the other hand, is looking to diversify its business, such as producing electric vehicles for other companies, including for EV startup Fisker Inc. The company has also been exploring possible sites to build EVs in the U.S.
In May, Foxconn and Fisker said they had finalized a deal to build Fisker's EVs. Foxconn also said it was in talks with Wisconsin about building EVs there.
Foxconn's Chairman, Young Liu, confirmed to news outlet Nikkei Asia in August that the company plans to build an EV factory in the U.S. and another in Thailand.
In early June, Lordstown Motors said that there is "substantial doubt" that it can continue operations without an influx of new capital. The company previously said it was in talks to build vehicles for other automakers or lease the unused space in its sprawling 6.2 million square feet factory. Lordstown uses roughly 30% of the plant's footprint.
Lordstown still faces probes by federal prosecutors in Manhattan and the U.S. Securities and Exchange Commission related to its merger with a special-purpose acquisition company (SPAC) and statements it previously made about preorders for its vehicles.
Lordstown Motors officially revealed the Endurance pickup truck in June 2020, which included an appearance by former Vice President Mike Pence, who touted the return of manufacturing jobs to the Ohio region spearheaded by what he called innovative companies like Lordstown Motors. That might still happen, but the EVs coming out of the Ohio factory are more likely to be built by Foxconn rather than Lordstown Motors.
In October of last year, Foxconn announced that it aims to provide components or services to around 10% of the world's electric vehicles (EVs) between 2025 and 2027. Chairman Young Liu said his company was in talks with multiple auto manufacturers.
Fisker announced in February that it entered into a MOU with Foxconn for a project to develop what the company calls a "breakthrough electric vehicle." The proposed collaboration is codenamed ‘Project PEAR' (Personal Electric Automotive Revolution) with projected annual volumes of more than 250,000 units. Production of the new EV is planned for Q4 2023.
"We welcome the news from Foxconn, our co-investment partner on Project PEAR, concerning their manufacturing plans for the facility in Ohio," said Henrik Fisker, chairman and CEO of Fisker Inc. "Since signing the agreement with Foxconn earlier this year, we have been working together intensively on all aspects of Project PEAR including design, engineering, supply-chain and manufacturing. Fisker's commitment to volume manufacturing in the United States takes another important step forward today with the signing of this agreement." Lordstown Motors shares up nearly 8% to $7.93 on Thursday after the report from Bloomberg.
"We welcome the news from Foxconn, our co-investment partner on Project PEAR, concerning their manufacturing plans for the facility in Ohio," said Henrik Fisker, chairman and CEO of Fisker Inc. "Since signing the agreement with Foxconn earlier this year, we have been working together intensively on all aspects of Project PEAR including design, engineering, supply-chain and manufacturing. Fisker's commitment to volume manufacturing in the United States takes another important step forward today with the signing of this agreement."
Lordstown Motors shares up nearly 8% to $7.93 on Thursday after the report from Bloomberg.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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