LORDSTOWN — The dispute between Lordstown Motors Corp. and Foxconn over a $170 million equity investment agreement “does not impact the operation” of the Taiwanese technology company’s auto making plant in Lordstown, its chairman, Young Liu, said.

“Our approach to production capacity we have in Ohio is comprehensive,” Liu said Tuesday during the company’s first quarter 2023 financial results call. “We are being prudent about how to optimize that capacity with the best customers.”

Liu also said Foxconn remains “open to continued dialogue to find the best solution for each other” regarding the agreement with Lordstown Motors.

Lordstown Motors stated in a May 4 regulatory document that discussions with Foxconn, which already has invested millions into the struggling electric-vehicle maker, over future investments were at an “impasse” and Foxconn did not intend to close on a common stock purchase worth about $47.2 million on May 8.

Lordstown Motors on Tuesday declined to answer questions regarding the passing of the date earlier this week, instead referring to a previous statement that Foxconn’s “actions are completely unwarranted” and their conduct “has resulted in material — and what is becoming irreparable — harm to the company.”

The funding is part of a $170 million equity investment agreement the companies agreed to in November that called for Foxconn to close on a second round of funding on May 8. Foxconn also agreed to purchase up to $70 million more shares in preferred stock once certain milestones related to predevelopment and design activities of a new joint EV program were achieved.

The first round of the funding for about $52.7 million in common and preferred stock closed Nov. 22.

If closing does not happen or is delayed “or such fundings do not occur” Lordstown Motors “will be deprived of critical funding” needed to operate, the filing states.

Not resolving the dispute with Foxconn and other challenges facing Lordstown Motors could lead to the company filing bankruptcy, the filing states.

Foxconn claims Lordstown Motors breached the agreement when it received a delisting notice from Nasdaq, the exchange where the company’s stock is traded, for following below $1 per share for 30 days in a row. Foxconn gave Lordstown Motors 30 days to cure the breach.

The company has 180 days to come back into compliance with Nasdaq’s rule. To do so, the closing bid price must be at least $1 per share for at least 10 days in a row before Oct. 16. Even then, Lordstown Motors could ask the exchange for more time.

Foxconn — the world’s largest contract manufacturer of consumer electronics — acquired the auto assembly plant, the former General Motors small-car factory, for $230 million in May 2022 from Lordstown Motors.

So far, Foxconn has agreements to manufacture Monarch’s battery-powered, driver-optional farm tractor, the MK-V, and Lordstown Motors’ all-electric truck, the Endurance.

It also has an agreement with California’s INDIEV to make the prototype versions its Indi One, and could be the factory where Fisker Inc.’s crossover, the PEAR, is manufactured.

Said Liu, “in the last couple of years, Foxconn has been proactively seeking customers. However, now the interest is two way — we are also being approached by potential customers as well. I’m talking about traditional auto OEMs (original equipment manufacturers). The IRA (Inflation Reduction Act) has made our Ohio capacity attractive.”

The act provides tax credits for consumers who purchase an electric vehicle made in the U.S.

Liu said the company is “taking a multi-customer approach to optimize and allocate” capacity at the factory.

“Having multiple customers means no concentration in a single risk. So, I’m not looking at capacity utilization percentages when a customer comes or goes in this disruptive era,” Liu said.

Also, Foxconn is targeting for its EV business 5 percent of global market share by 2025, Liu said.

“In the run-up to that, this year and the next two years are a period of active courtship for new customers,” Liu said. “It is also about acquiring the skills and technologies to gradually ramp up to mass production.”

LATEST FILING

In a regulatory filing Thursday, Lordstown Motors announced two new board directors designated by Foxconn. The appointments are part of the equity agreement. To make room, Lordstown Motors increased the board from nine to 11 members.

Filling the class one director position is Jerry Hsiao, 51, chief product officer of Foxconn Technology Group. The class two director is Liting Cai, 48, vice president and division head of the EV and Renewable Division of Business Group D of Foxconn Technology Group.

The filing also states that Foxconn will give up the board seats if it does not meet certain stock ownership thresholds in connection to the investment agreement.