Lordstown Motors agreed to sell a substantial stake and give two board seats to manufacturing partner Foxconn Technology Group, replacing a previous arrangement for electric-vehicle production with a new deal.
Foxconn will invest as much as $170 million in the startup through the purchase of preferred stock and 18.3% of common shares, according to a statement late Monday. The transaction will require a review by the Committee on Foreign Investment in the United States.
The move deepens ties between the two companies, giving Foxconn a sizeable voting interest over the next two years as they pursue a newly announced EV development program together. Lordstown has sought to build its Endurance electric pickup with capital from Foxconn, which has had ambitions to grow in the EV market.
“It’s strengthening the strategic partnership with Foxconn,” Lordstown Chairman Dan Ninivaggi said in an interview. “It’s another step in that direction. It also provides us capital for our jointly developed EV program.”
Foxconn, the Taiwanese manufacturer best known as the maker of Apple Inc.’s iPhone, can buy 9.9% of the company without a CFIUS review, but would need U.S. government approval to go beyond that. Assuming the deal is approved, Foxconn could own up to 19.9% of the common voting stock. Even if Foxconn buys more shares, it could not exceed that amount of voting stock, Ninivaggi said.
The first tranche of the share sales is expected to close around Nov. 22 as a second common-share sale is pending subject to a CFIUS review. Foxconn also has a two-year standstill on buying new shares in the open market, and has agreed not to buy more stock without Lordstown’s approval. That effectively means Foxconn would have to reopen negotiations with Lordstown to acquire more stock or eventually take over the company.
Lordstown has built 12 of its first batch of 500 pickups. The rate of production will increase toward end of this month and is expected to total 30 units by end of the year, with the rest built in the first half of 2023, it said.
The company also is looking for other automakers who want to sell the Endurance under their own brand to get into the electric truck market quickly, Edward Hightower, Lordstown’s president, said on a conference call with analysts.
Foxconn completed a purchase of Lordstown’s Ohio factory earlier this year.
Separately, Lordstown announced third-quarter results, revealing an operating loss of $154.8 million. It ended the period with cash and short-term investments of $204 million, according to a statement. The company reaffirmed its plan to begin Endurance deliveries in the fourth quarter, with an initial production target of 500 units.
Lordstown’s chief financial officer, Adam Kroll, said the company expects to end the year with between $150 million and $165 million in cash. It ended the third quarter with $204 million in cash and short-term investments.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.