Electric light-duty truck manufacturer Lordstown Motors has officially sold its 6.2-million-square-foot Lordstown, Ohio factory to Foxconn, the Taiwanese hardware manufacturing company best known for making Apple's iPhone. The $230 million deal is expected to close by the end of April next year, according to a statement from Lordstown.
The terms of the deal are in line with the agreement in principle the two companies entered into on September 30, after which Foxconn promptly bought $50 million in common stock directly from Lordstown at $6.8983 per share. Foxconn is now on the hook for a $100 million down payment by November 18 and subsequent payments of $50 million in both February and April before the final close targeted for April 30, 2022.
Foxconn also agreed to pursue a contract agreement with Lordstown to help the struggling EV company manufacture its Endurance pickup truck, according to a statement from Lordstown. The two parties will also pursue a joint venture to co-design and develop commercial fleet vehicle programs for North American and international markets. Finally, once the deal is done, Foxconn will get 1.7 million warrants to buy Lordstown common stock at $10.50 per share for the next three years. Lordstown will keep its electric motor production line and battery module and pack assembly lines.
Earlier this year, Foxconn signed an agreement with electric car startup Fisker to co-develop and manufacture its new vehicle under Fisker's PEAR program in North America. Foxconn has since signaled that Fisker's vehicles will also be produced at the Ohio factory, which Lordstown had purchased from General Motors back in 2019. With this factory purchase, Foxconn gets its first automotive factory and a big shot at expanding beyond the manufacturing of phones and laptops.
Lordstown, which is under investigation by both the Securities and Exchange Commission and the Department of Justice after a research firm accused the company of faking EV truck pre-orders, is combating financial woes as well as the loss of many executives, including president Rich Schmidt, who resigned on Wednesday morning. This deal could help Lordstown reduce its raw material and component costs. Foxconn has a strong supply chain network, logistics capabilities and purchasing powers needed to help reduce production costs and handle a volatile supply chain. Foxconn is also an expert at software-hardware integration, which is very important for electric vehicles.