Lordstown sells its Ohio plant to Foxconn in hopes it will help build its electric pickup truck

Lordstown has announced that it has agreed to sell its Ohio plant to Chinese manufacturing giant Foxconn in hopes it can help the startup build its electric pickup truck.

The company was founded a few years ago following an agreement to take over GM’s Lordstown plant for $ 20 million, and it plans to put an electric pickup truck, the Lordstown Endurance, into production this year. .

We have previously said that the schedule is extremely ambitious due to the fact that the factory needs to be completely retooled, and Lordstown is trying to bring to market the first passenger vehicle with wheel hub motors, which is untested technology. in vans.

Lordstown was made public through a PSPC deal last year and saw its valuation soar to $ 4 billion.

The company has seen its stock price rise following several announcements, including the fact that it has secured more than 100,000 orders for its Endurance pickup truck.

However, things took a turn for the worse when those orders were exposed as exaggerated, and Lordstown’s first prototype caught fire on its first ride.

The company has since come under increased pressure to deliver, and the chances of Endurance hitting the market this year have rapidly diminished.

Things seemed to get out of hand when CEO Steve Burns and CFO Julio Rodriguez announced their resignations earlier this summer.

Now Lordstown Motors is trying to turn the boat around by bringing in a partner: Foxconn, a giant manufacturing company better known as the maker of Apple’s iPhone, but they recently tried to get into the business of electric cars.

As part of the deal, Lordstown would sell most of its factory to Foxconn for $ 230 million and sold them for $ 50 million in stock.

They are also negotiating a contract with Foxconn to help Lordstown manufacture their electric van.

Here are the main points of the agreement:

• Lordstown Motors and Foxconn will use commercially reasonable efforts to negotiate a definitive agreement whereby Foxconn would purchase the Lordstown facility, excluding the hub motor assembly line, battery module and power plant assets. Lordstown Motors’ packaging line, certain intellectual property rights and other assets excluded, for $ 230 million.
• The two entities would also negotiate a contract manufacturing deal, which would be a condition of closing the purchase of the facility, whereby Foxconn would manufacture Lordstown Motors’ full-size Endurance pickup truck at its Lordstown plant. Lordstown Motors would also agree to provide Foxconn with certain rights regarding future vehicle programs.
• Concurrent with the closing of the Definitive Agreements, Lordstown Motors would issue warrants to Foxconn exercisable until the third anniversary of closing for 1.7 million common shares at an exercise price of $ 10.50 per share. .
• The parties have agreed to explore licensing agreements for other pickup truck programs.
• After the final agreements close, Lordstown Motors would enter into a long-term lease for part of the existing facility for its Ohio-based employees, and Foxconn would offer employment to the agreed Lordstown operating and manufacturing employees.

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