Agreement between Lordstown Motors and Foxconn
According to its official page, Lordstown Motors and Hon Hai Technology Group announced its agreement to work jointly. The agreement is that two companies work together on Lordstown Motors’ Electric Vehicle (EV) programs in Lordstown Motors’ 6.2 million square foot production and assembly plant in Lordstown, Ohio.
Beyond certain customary provisions, the Agreement is non-binding and subject to the negotiation and execution of definitive agreements. The parties on the same date have entered into a subscription agreement. Foxconn will purchase approximately $50 million of Lordstown Motors’ common stock directly from the company at a price of $6.8983 per share. Also, Foxconn has agreed to retain these shares for a specified period.
The agreement between both companies would allow Lordstown Motors to take advantage of the technology and manufacturing expertise of Foxconn. This is because Lordstown Motors pursues the production of electric vehicles at its Ohio facility. The goal of the partnership is to leverage increased market opportunities in scalable electric vehicle production in North America.
Who is Lordstown Motors Corp.?
Lordstown Motors Corporation is an American electric vehicle automaker located in Lordstown, Ohio. The company is based out of the Lordstown Assembly plant which General Motors previously owned. The US company designs and manufactures electric vehicles that revolutionize the way work gets done.
Who is Foxconn?
Founders established Hon Hai Technology Group (Foxconn) in Taiwan in 1974. The company is the world’s largest electronics manufacturer. Foxconn is also the leading technological solution provider. In addition, it continuously leverages its expertise in software and hardware to integrate its unique manufacturing systems with emerging technologies.
In fact, three key technologies drive the four core product segments: Consumer Products, Enterprise Products, Computing Products and Components and Others. Foxconn has established R&D and manufacturing centers all over the world. They are China, India, Japan, Vietnam, Malaysia, Czech Republic, U.S. and more. With a focus on research and development, the company owns more than 83,500 patents.
Our media has already reported that Foxconn, might produce EVs in Wisconsin, the US. Based on this agreement, we think that the Taiwanese company finally took action to manufacture Electric Vehicles in the US. Of course, China and Europe are two biggest EV markets in the world. However, American EV market also becomes more important.
In fact, many analysists predict that the EV market in the US will be growing in a decade. EV sales share would be about 30% by 2030 in the US. As a result, two largest US automotive makers, General Motors and Ford, are accelerating electrification. In addition, there are not only Tesla but also other EV startups in the US. Therefore, Foxconn and Lordstown can seek the growth opportunity there.
From Foxconn’s point of view, production of EVs is different from that of smartphones. Of course, the Taiwanese company has strong expertise in producing electronic products. However, an Electric Vehicle needs more than 10 thousands components. In addition, the company seeks a new opportunity in the US to produce new hardware. From Lordstown Motors’ point of view, the company must expand its capability as hardware and software provider.
Thus, this agreement may satisfy both parties’ demand.