Lordstown Motors (LMC), a maker of electric light duty trucks focused on the commercial fleet market, has announced that it has closed the sale of its Lordstown facility and signed a contract manufacturing agreement and joint venture agreement for product development with affiliates of Hon Hai Technology Group (Foxconn).
As previously disclosed, on November 10, 2021, Lordstown Motors and Foxconn entered into an asset purchase agreement (APA) providing for the sale of LMC's Lordstown, Ohio vehicle assembly plant to Foxconn for US$230 million plus the reimbursement of certain operating and expansion costs from September 1, 2021 to the closing date. The transaction was subject to several conditions, including that the parties enter into a contract manufacturing agreement for LMC's flagship vehicle, the Endurance, a full-size, all-electric pickup truck.
On May 11, the transactions under the APA were completed. Total proceeds to LMC were US$230 million, plus the reimbursement of approximately US$27 million in operating and expansion costs. In addition, Foxconn had previously purchased US$50 million of LMC Class A common stock directly from the company, according to LMC. Concurrently with the closing, Foxconn and Lordstown Motors entered into a manufacturing supply agreement for the Endurance. Start of commercial production of the Endurance is targeted for the third quarter of this year, with the first commercial deliveries expected in fourth quarter. Foxconn will assume manufacturing operations at the Lordstown plant immediately with no interruption. Approximately 400 LMC employees will transition to employment with Foxconn. LMC will retain a presence in Lordstown, Ohio along with engineering and technical centers, as well as corporate staff, in Farmington Hills, Michigan and Irvine, California.
In connection with the closing of the APA, Foxconn and LMC also entered into a joint venture agreement to co-develop EV programs using Foxconn's Mobility-in-Harmony (MIH) open-source EV platform. The new joint venture will be called MIH EV Design LLC and will be 55% owned by Foxconn and 45% by LMC. Foxconn is committing US$100 million towards the new joint venture, including a loan to Lordstown for US$45 million to support its initial capital commitment. The joint venture creates an innovative business model whereby LMC and Foxconn would jointly develop new electric vehicles, utilizing the MIH platform, for LMC in the North American commercial vehicle market and for other OEMs internationally.
Vehicles developed by MIH EV Design would be built for North America at the Lordstown, Ohio plant, and at other Foxconn contract-manufacturing locations around the world. The objective is for OEM users of Foxconn's flexible MIH platform, manufacturing footprint, and supply chain to achieve production scale at lower volumes and with a shorter time to market, said LMC. The joint venture also leverages Lordstown Motors' strong engineering and product development capabilities globally and provides LMC a scalable vehicle development platform in North America, accelerating EV development, reducing product development costs, and increasing the breadth of LMC's product portfolio over time.
"The closing of the Foxconn APA and the completion of a joint venture agreement for the development of new electric vehicles using Foxconn's MIH platform are important milestones for LMC," said Daniel Ninivaggi, CEO of Lordstown Motors. "Our strategic partnership with Foxconn provides LMC with a flexible and less capital-intensive business model, access to broad supply chain and software capabilities and an effective vehicle development platform to bring EVs to market faster and more efficiently. I have always been a strong believer in what Foxconn is doing to accelerate the adoption of electric vehicles and we are proud to be their partner."
"The creation of the MIH EV Design LLC joint venture between Lordstown Motors and Foxconn supports the EV ambitions of both companies. The MIH shared EV architecture will create synergies in vehicle design, engineering, development, testing, sourcing, and manufacturing. This will enable us to create innovative and winning products for our customers, while optimizing costs and reducing our time to market," said Edward T Hightower, president of Lordstown Motors.
