Hon Hai Technology Group (Foxconn) and Lordstown Motors (LMC) have entered into a definitive agreement for the EMS giant to acquire the US electric vehicle (EV) maker's factory in Ohio for US$230 million.
Foxconn and LMC, a provider of electric light-duty trucks focused on the commercial fleet market, signed a definitive asset purchase agreement concerning the latter's factory in Lordstown, Ohio on November 10, having signed a preliminary agreement on September 30.
According to the pact, LMC has agreed to sell to Foxconn the Lordstown facility, excluding certain assets such as the hub motor assembly line and battery module and pack lines, for US$230 million.
Foxconn has agreed to make a down payment of the purchase price of US$100 million by November 18, and subsequent down payments of US$50 million on each of February 1, 2022 and no later than April 15, 2022. The balance of the purchase price will be paid at closing.
The parties have agreed to pursue a contract manufacturing agreement for the Endurance pickup truck, which must be entered into before closing - currently targeted by April 30, 2022.
Lordstown Motors and Foxconn will pursue a joint venture agreement to co-design and develop vehicle programs for the global commercial fleet market, using the Foxconn-initiated MIH open platform. Lordstown and Foxconn would have the right to commercialize these new EV programs in North America and internationally.
Upon the closing, Foxconn will receive 1.7 million warrants to acquire Lordstown common stock, exercisable for three years, at a price of US$10.50 per share.
"This partnership marks the commencement of integrating our resources with Lordstown Motors to develop Ohio into Hon Hai's most important electric vehicle manufacturing and R&D hub in North America," said Young Liu, chairman of Hon Hai Technology Group. "As we look to inject Hon Hai's software and hardware capabilities in the information and communications industry with the wealth of automotive experience that resides in this town and our partners, we will be able to provide customers with more real-time and efficient Electric vehicle products."
Daniel Ninivaggi, CEO of Lordstown Motors, stated, "We are happy to have formed a strategic partnership with a company as innovative and forward-thinking as Foxconn. I believe in their EV strategy and look forward to substantial collaboration in the future. In my view, this transaction provides LMC a better opportunity to fulfill its original mission of satisfying the growing demand for electric vehicles, particularly in the underserved commercial market, with a more flexible business model."
Article translated by Rodney Chan
