Foxconn put its money where its mouth is by fully committing to Lordstown Motors with a new $170 million investment package that secures a future collaboration for a joint EV project.
After first investing in Lordstown Motors last year by purchasing its production facility in Ohio, Foxconn has continued to expand its partnership with the automaker. Foxconn’s joint partnership with Lordstown helped get the automaker’s production up and running and helped secure financial stability in the company after previous leadership failed to launch automotive manufacturing.
Of the additional $170 million equity investments in Lordstown Motors, announced Nov. 7, $100 million will go toward a newly created Series A convertible preferred stock, while the additional $70 million will be used to purchase Lordstown’s common stock.
With the purchase, Foxconn now holds 18.3% of Lordstown’s common stock on a pro-forma basis, giving it the right to designate two members of the automaker’s Board of Directors.
Foxconn will relinquish these board positions if it does not maintain a certain level of ownership in Lordstown’s common stock, it said.
The $100 million investment for direct preferred stock will help fund Lordstown’s “development and design activities for a new electric vehicle program in collaboration with Foxconn.” The $70 million of common stock will be used to fund general corporate activities.
The 12.9 million shares of common stock will exchange hands Nov. 22 at a price of $1.79 per share. This will result in initial proceeds of $22.7 million. The 300,000 shares of preferred stock at a purchase price of $100 per share will yield proceeds of $30 million.
The remaining 26.9 million shares of common stock will be purchased at $1.76 per share but will not be finalized until the deal is reviewed by agencies such as the Committee on Foreign Investment in the U.S., pending other approvals. This portion of the deal will yield $47.3 million.
The preferred stock brings more interesting developments to the table between the two companies. Foxconn will purchase the remaining preferred stock shares, given Lordstown achieves EV program funding milestones agreed upon by the companies. Foxconn and Lordstown did not disclose these funding milestones.
As a result of the investments, Lordstown and Foxconn are terminating their existing joint venture involving Lordstown EV Corporation and Foxconn EV Technology, Inc.
All new project developments are expected to fall under Lordstown Motor 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," said Daniel Ninivaggi, Lordstown’s CEO. "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.”
Lordstown recently launched production of the Endurance all-electric pickup truck in Q3.
Abby Andrews