After the rumors that Foxconn would buy the Lordstown Motors plant in the Ohio city with the same name, the Taiwanese company confirmed it would do so. Hon Hai (Foxconn’s official name) will pay $230 million for most of the facility. In a short sentence lost in the middle of the press release, it revealed why it did so: to manufacture the Fisker PEAR in that factory.
To be more specific, Foxconn said that “this facility would serve as a speed-to-market asset that would also support Foxconn's partner and customer, Fisker Inc.” That’s all we needed to understand why the Taiwanese manufacturing supplier was even interested in the deal.
The Fisker PEAR (Personal Electric Automotive Revolution) will be an electric sedan, as Henrik Fisker revealed in a tweet on July 7. The vehicle will be manufactured over the FP28 architecture, based on Foxconn’s MIH Open Platform. Fisker intends to sell its entry-level derivative for less than $30,000 in Q4 2023. The most expensive version will offer AWD, which implies that the most affordable PEAR derivative will be RWD or FWD. We bet on an RWD EV.
Although the PEAR development is already happening, there was still doubt about where it would be manufactured in the U.S. The Lordstown Motors deal clarifies that and also helps us understand how things will unfold for the Endurance.
Photo: Foxconn
Lordstown Motors will keep the “hub motor assembly line, battery module and packing line assets, certain intellectual property rights and other excluded assets” that the announcement does not mention. That confirms Elaphe will remain as a partner in the project, and that the Endurance will have in-wheel motors as planned.
Young Liu, Hon Hai’s chairman, even praised Lordstown Motors for the design. According to the executive, “the innovative design of the Endurance pickup truck, with its unique hub motors, delivers an advantageous user experience and has manufacturing efficiencies.” That brings us to another important part of the deal.
In order to be able to buy the factory, Foxconn agreed to manufacture the Endurance for Lordstown Motors. On the other hand, the American startup agreed to partner with Foxconn for its future vehicle programs.
Photo: Lordstown Motors
Foxconn stressed that the agreement in principle is non-binding. Both companies pledged to work on a final agreement with “commercially reasonable best efforts.” Part of these efforts includes a subscription agreement in which Hon Hai will buy “approximately $50 million of Lordstown Motors’ common stock directly from Lordstown Motors at a price of $6.8983 per share.” Foxconn agreed to keep them for a specified (and undisclosed) period.
When both companies reach a final deal, Lordstown Motors will “issue warrants to Foxconn that are exercisable until the third anniversary of the closing.” These warrants will be for “1.7 million shares of common stock at an exercise price of $10.50 per share.” We have no idea how much this represents in Lordstown Motors total number of shares. However, it implies that Hon Hai may become a relevant shareholder if things go according to plan.
For Lordstown Motors, this is a fantastic deal. It practically restores hopes that it will indeed sell a vehicle instead of just biting the dust after its former CEO left for inflating pre-order numbers. Foxconn is also celebrating the fact that it will not have to build a factory from scratch to produce the Fisker PEAR and future Lordstown Motors’ products. The companies also mentioned that are plans for new pickup trucks. If that is confirmed, Hon Hai will help sell vehicles that have amazing sales volumes on the American market. What’s not to celebrate about that, right?
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