Lordstown Motors Corp. agreed on Thursday to partner with Foxconn Technology Group in a $280 million deal that has the startup selling its former General Motors factory in Ohio to the Taiwanese company in exchange for cash while also receiving an equity investment.
On Friday, Foxconn and Lordstown said they plan to pursue a U.S. Energy Department loan from a program to help pay for the costs of retooling a factory to build electric trucks. Lordstown told Reuters in January 2020 it was pursuing a $200 million loan from the program and it formally applied in May 2020.
The Energy Department’s Advanced Technology Vehicles Manufacturing (ATVM) program, which previously awarded loans to Tesla, Ford and Nissan to retool factories, has not made any new loans since 2011.
Under the in-principle agreement, the Taiwanese tech giant, also known as Hon Hai Precision Industry Co, will manufacture Lordstown Motors’ Endurance full-size pickup truck at its Lordstown facility, and it will also support start-up automaker Fisker Inc., a Foxconn partner and customer.
Lordstown and Foxconn said in a filing they will each "seek a proportionate amount of the ATVM Loan and will be responsible for a proportionate amount of any and all expenses incurred in obtaining the ATVM Loan."
The companies hope to complete a purchase agreement by Oct. 31 and complete the deal by April 30.
Under terms of the transaction, Lordstown Motors will sell the Lordstown factory to Foxconn for about $230 million after buying it from GM for just $20 million two years ago. The maker of Apple Inc.’s iPhone will buy $50 million worth of common stock in its new partner.
The deal is contingent on the two sides reaching an agreement on manufacturing the vehicle. Foxconn plans to start mass production in April, according to a person familiar with its schedule.
The accord gives both companies something they badly need. Lordstown Motors gets a partner that will hasten the startup’s move into large-scale production, which will help lower the high costs required to make EVs. Foxconn gets a plant in North America where it can build its open-source electric vehicle platform and do contract manufacturing for partners like Fisker.
“It’s less about a facility sale than a strategic partnership,” Lordstown Motors CEO Dan Ninivaggi said in an interview. “You have to find a way to get scale in the auto industry. Foxconn has a vision. They’ve got enormous capabilities in manufacturing and they will be able to fill that plant faster than we could.”