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Foxconn to run former GM plant

Taiwanese company, LMC also form $100M joint venture for EV development

LORDSTOWN — Lordstown Motors Corp. and Foxconn have finalized an agreement for the Taiwanese technology and electronics giant to purchase the electric-vehicle startup’s automobile assembly plant.

Closing the agreement — announced Wednesday after the market closed — means Foxconn will now become the contract manufacturer for Lordstown Motors’ flagship vehicle, the Endurance pickup truck, and the companies came to terms on a joint venture agreement to co-develop electric vehicle programs.

The new company called MIH EV Design LLC — named in an apparent nod to Foxconn’s mobility in harmony (MIH) electric-vehicle platform, under which the vehicles will be developed — has a $100 million commitment from Foxconn, including a $45 million loan to Lordstown Motors to support its initial capital commitment.

Foxconn will immediately assume manufacturing operations at the Lordstown plant.

Wednesday marked seven days until a deadline the companies set to finalize the asset purchase agreement for the factory that was announced in November. Not having a deal in place meant Lordstown Motors would be forced to refund Foxconn $200 million — money Lordstown Motors has admitted it didn’t have — in down payments and risk Foxconn closing on liens on some or most of Lordstown Motors’ assets.

Doing so would have meant Lordstown Motors would go out of business.

Lordstown Motors CEO Dan Ninivaggi said closing the asset purchase agreement and completing the joint product development agreement “are important milestones” for the company.

“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, Ninivaggi said. ” 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.”

FACTORY SALE

The agreement was for $230 million plus Foxconn agreed to reimburse Lordstown Motors for certain operating and expansion costs from Sept. 1 to the closing date that turned out to be about $27 million, according to a release.

The transaction was subject to several conditions, including that the parties enter into the contract manufacturing agreement for the Endurance.

The agreement also included a $50 million equity investment by Foxconn.

With the closing, the companies signed a manufacturing supply agreement for the Endurance, limited production of which is targeted for the third quarter with some commercial deliveries expected in the fourth quarter.

About 400 Lordstown Motors’ employees will transition to employment with Foxconn. Lordstown Motors will retain a presence in Lordstown along with engineering and technical centers, as well as corporate staff, in Farmington Hills, Mich., and Irvine, Calif.

JV AGREEMENT

The joint venture that will be 55 percent owned by Foxconn and 45 percent owned by Lordstown Motors “creates an innovative business model” for the companies to co-develop new electric vehicles on the MIH platform for Lordstown Motors in the North American market and for other original equipment manufacturers (OEMs) across the globe, the release states.

Vehicles developed by MIH EV Design would be built for North America at the Lordstown and at other Foxconn contract-manufacturing locations around the world.

“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,” said Edward T. Hightower, president, Lordstown Motors. “This will enable us to create innovative and winning products for our customers, while optimizing costs and reducing our time to market.”

OTHER PRODUCTION

Foxconn already has a contract manufacturing agreement in place with Fisker Inc., a California-based maker of electric vehicles, to manufacture its second vehicle, the PEAR.

Last week, Fisker’s chairman and CEO, Henrik Fisker, said the plan remains to produce the PEAR in Lordstown.

So far, Fisker has received more than 2,500 reservations for the PEAR since opening reservations in February with little promotion of the vehicle, Fisker said.

The company is planning for three versions of the auto they predict will allow them to sell 1 million PEARs sometime in 2027. Not all, however, would be made in Lordstown. The company is contemplating production in China, Europe and India.

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