Foxconn plans to invest $170 million in EV truck maker Lordstown Motors | Mint

Foxconn plans to invest $170 million in EV truck maker Lordstown Motors

Electric Endurance pick-up truck is displayed at Lordstown Motors Corporation, in Lordstown, Ohio (Photo: AP)
Electric Endurance pick-up truck is displayed at Lordstown Motors Corporation, in Lordstown, Ohio (Photo: AP)

Summary

The startup plans to use the funds to hire engineers, and will develop an electric vehicle with the Taipei-based contract manufacturer

Foxconn Technology Group, the world’s biggest contract manufacturer for electronics, is deepening its investment in Lordstown Motors Corp., a once-troubled EV startup that recently began building its first all-electric pickup truck at a former General Motors Co. plant in Ohio.

The two companies said Monday that Taipei-based Foxconn plans to spend $170 million to buy common stock and newly created preferred shares, providing Lordstown Motors with a fresh injection of capital as it works to increase production of its debut model, the Endurance.

Additionally, Foxconn and Lordstown Motors said they would jointly develop their first electric vehicle together, declining to provide further details about the project.

Nasdaq-listed Lordstown shares jumped over 12% in premarket trading Tuesday.

The investment by Foxconn, a contract manufacturer best known for its work with Apple Inc., is the latest cash infusion into the electric-truck startup, which a little more than a year ago was in danger of running out of money.

The truck maker said it plans to use the proceeds from the equity sale to hire engineers and fund operations, including building the first 500 pickup trucks.

Lordstown Motors first made headlines in 2019, when it purchased a then-shut GM factory with the aim of building battery-powered trucks. GM at the time was under pressure by then-President Donald Trump for closing the factory, long a major employer in that region of Ohio.

Lordstown Motors was among a number of little-known EV startups that went public in recent years through reverse-merger deals, or SPACs, that helped them raise fresh capital, despite never having sold a single vehicle. Many of these young companies have since floundered as they encountered manufacturing and financial troubles. Shares in Lordstown Motors have declined about 50% this year.

The Ohio-based upstart has encountered several delays getting out its first truck, and in 2021, drew the scrutiny of the U.S. Securities and Exchange Commission after a short seller accused the startup of misleading investors about the strength of its truck preorders. Its founder and then-chief executive, Steve Burns, stepped down shortly after.

The company has said that a board committee found that some disclosures around the preorders were in certain respects inaccurate and it was cooperating with federal authorities.

Later in 2021, Lordstown Motors revealed plans to sell its auto factory in Ohio to Foxconn with the contract manufacturer in turn agreeing to invest $50 million in the startup.

The new $170 million investment from Foxconn is contingent on approval from the federal government’s Committee on Foreign Investment in the U.S., or Cfius, and the funds are slated to come in tranches, said Daniel Ninivaggi, Lordstown Motors’ executive chairman.

Upon the deal’s completion, Foxconn expects to hold all the startup’s outstanding preferred stock and 18.3% of its common stock on a pro-forma basis and will have the right to appoint two members to the board of directors.

Lordstown Motors said it expects the Cfius approval process to last three to four months.

The investment in Lordstown Motors is another example of Foxconn’s broadening ambitions in the car industry.

Earlier this year, Foxconn revealed plans to build a $9 billion factory in Saudi Arabia that would make a variety of different products, including components for electric vehicles.

Foxconn has also unveiled prototype electric vehicles that it has designed in-house and hopes to use as a basis to build models for other car makers.

The contract manufacturer already has a deal with Fisker Inc. to produce its coming Pear EV at the Ohio plant, as part of an earlier deal to use the factory to contract manufacture vehicles for other car companies.

Mr. Ninivaggi said the latest funding deal for Lordstown Motors would bring Foxconn’s total investment in the startup to about $350 million.

He added that the company plans to produce 500 Endurance trucks initially for customers—50 of which are to be delivered by the end of this year.

“Our ability to get to really high volumes on our own is limited, not only by capital, but by commercial reach," Mr. Ninivaggi said.

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