Trending
LORDSTOWN -- Electric-vehicle startup Lordstown Motors Corp. has agreed to sell its factory -- a sign of automaking might in the Mahoning Valley for 53 years until its 2019 closure under General Motors -- to Taiwanese tech giant Foxconn for $230 million.
The companies jointly announced late Wednesday a definitive asset purchase agreement is in place for the 6.2 million-square-foot facility about six weeks after they announced an agreement in principle.
The formal agreement implements several terms from the principle agreement in late September. They are:
• The sale is for $230 million but excludes certain assets of Lordstown Motors, including the hub motor assembly and battery pack and module lines;
• Foxconn, one of the largest manufacturers of electronics in the world and a maker of Apple's iPhone, has agreement to a $100 million down payment by Nov. 18 and payments of $50 million Feb. 1 and by no later than April 15. The remaining balance will be paid at closing;
• Lordstown Motors and Foxconn, an affiliate of Hon Hai Precision Industries, have agreed to pursue a contract manufacturing agreement for Lordstown Motors' flagship vehicle, the Endurance truck, that must be signed before closing, which is targeted for April 30;
• The companies agreed to pursue a joint venture agreement to co-design and develop vehicle programs for the global commercial fleet market; and
• When the deal closes, Foxconn will receive 1.7 million warrants to acquire Lordstown Motors common stock that are exercisable for three years at $10.50 per share.
Shortly after the principle agreement was announced, Foxconn, as a show of good faith, bought $50 million in common stock directly from Lordstown Motors at $6.89 per share.
Shares of Lordstown Motors stock were trading up more than 10 percent in after-hours trading following the announcement after the market closed.
"This partnership marks the commencement of integrating our resources with Lordstown Motors to develop Ohio into Hon Hai's most important electric-vehicle manufacturing and R&D (research and development) hub in North America," Young Liu, chairman of Hon Hai Technology Group, said in a release.
Dan Ninivaggi, chief executive for Lordstown Motors, said, "This transaction provides LMC a better opportunity to fulfill its original mission of satisfying the growing demand for electric vehicles, particularly in the underserved commercial market, with a more flexible business model."
The partnership "will unlock the tremendous potential of the Lordstown plant by getting it to scale faster" the release states.
Already, it has been announced California-based Fisker's PEAR (Personal Electric Automotive Revolution) electric vehicle is intended to be made in Lordstown.
Fisker and Foxconn finalized an agreement in May to assemble the vehicle. Fisker's CEO, Henrik Fisker, said if Foxconn and Lordstown Motors finalize the deal, it's his intent to make the PEAR with Foxconn in Lordstown.
Also, the partnership is expected to allow Lordstown Motors to reduce its raw material, component and other input costs.
"As one of the largest contract manufacturers globally, Foxconn will bring to bear the purchasing power, supply chain network and logistics capabilities to significantly reduce vehicle production costs and mitigate supply-chain risk," the release states.
Lordstown Motors "also stands to benefit from Foxconn's expertise in hardware software integration -- critical to EVs -- given their experience as a multinational electronics manufacturer."
Lordstown Motors acquired the facility from General Motors in November 2019 for $40 million with a loan from GM. The deal was structured that way to let Lordstown Motors take possession of the plant and begin repurposing it to launch its electric pickup truck while still raising operating capital in its earliest days.
General Motors closed the plant in March 2019.