Foxconn Increases Lordstown Investment | The Truth About Cars
If you’ve been following Lordstown Motors, you’ll undoubtedly know that the promising automotive startup has had a lot of trouble getting its electrified truck to market. With bankruptcy looming, the would-be automaker sold the all-important factory it had purchased from General Motors (at a discount no less) to Foxconn and created a new joint venture with the Taiwanese business. But it’s looking like more support will be needed before any vehicles manifest, so Foxconn is upping its investment by $170 million.
Originally intended to go into production in 2020, the Endurance pickup has been repeatedly stalled while the company sat on 12 million in licensing rights it had to pay to effectively build a remixed Workhorse W-15. In the interim, Lordstown engaged in one of those often-suspect reverse mergers with a special-purpose acquisition company (SPAC) named DiamondPeak Holdings. This resulted in an estimated valuation of $1.6 billion and was released from the mortgage obligations tied to the Ohio factory where General Motors used to build the Chevrolet Cruze.
The following year, Lordstown Motors endured several embarrassingly public failures and became the target of infamous short-seller and investment research firm Hindenburg Research – which released a scathing report suggesting that the automaker had grossly overstated demand to investors and was nowhere near its claimed manufacturing capabilities. Production delays persisted and it wasn’t long until the businesses’ share price began to tumble. This matter was made worse by the public becoming suspicious of reverse mergers, SPACs, promises of technological innovations that never seem to manifest, and a souring economy.
By June 2021, Lordstown Motors publicly confessed that it did not have enough money to begin commercial production of its vehicle and was now in danger of bankruptcy. Following a couple of months of management shakeups, the company announced that it had sold the factory to Foxconn Technology Group for $230 million. Many wondered how it planned on building cars without a factory, however, it was explained that Foxconn would invest $50 million into the company through a purchase of common stock and become the contract manufacturer for the Endurance pickup. Meanwhile, subsequent models would be built under the MIH EV Design LLC joint venture.
Foxconn’s new investment comes by way of purchasing existing Lordstown stock and totals $170 million USD. All of the money is said to be dedicated toward ensuring the Endurance pickup enters production and gives Foxconn an 18 percent stake in the company.
“Since announcing our first transaction with Foxconn more than a year ago, it has been our objective to develop a broad strategic partnership that leverages the capabilities of both companies,” stated Lordstown CEO Daniel Ninivaggi. “Foxconn’s latest investment is another step in that direction. Our Board of Directors and management team strongly believe that deep collaboration with the Foxconn EV ecosystem, including the Mobility-in-Harmony (MIH) open-source platform, offers tremendous opportunities to meet our mutual ambition to accelerate EV adoption globally. I look forward to welcoming Foxconn representatives to our Board and exploring other ways to deepen our partnership.”
[Image: Lordstown Motors]
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