Foxconn ramps up EV push with stake in US truck maker Lordstown

FOXCONN, the world’s biggest contract electronics maker, has extended its drive into electric vehicle (EV) business with a deal to take a near-20 per cent stake in loss-making US electric truck maker Lordstown Motors for up to US$170 million.

The accord, which will also give a Foxconn affiliate two board seats at startup Lordstown, comes as the iPhone maker bets on replicating its dominance in contract electronics manufacturing in the booming EV industry.

The Taiwanese giant has ramped up investment in EVs and semiconductors in recent years, announcing deals with US startup Fisker and Indian conglomerate Vedanta.

It said on Tuesday (Nov 8) the latest deal would deepen Lordstown’s ties with Foxconn’s EV development platform MIH or Mobility in Harmony.

Foxconn started manufacturing Lordstown’s Endurance pickup trucks in September after buying the US company’s Ohio facility. That deal was prompted by the need to clinch funds essential for the start of production of Endurance.

“In the future, there will also be opportunities to share LMC’s (Lordstown’s) technical resources with other customers, further expanding the MIH EV ecosystem, and enabling customers to choose better solutions and be more competitive,” Foxconn said.

Lordstown chief executive officer Edward Hightower, speaking via video at an MIH event in Taipei, said the truck maker and Foxconn were eyeing production for other original equipment manufacturers, or OEMs, as well.

“We also have the capability to do all of the advanced manufacturing work, all the design for manufactured ability, steps that need to be taken in creating a new vehicle programme, and finally the critical elements of launch at both the prototype, pre-production vehicle and commercial production phases,” Hightower said.

Under terms of the deal, Foxconn affiliate Foxconn Ventures will purchase 12.9 million shares on or after Nov 22 and an additional 26 million shares that will propel Foxconn’s holdings to 18.3 per cent of Lordstown’s common stock and all of its preferred stock, surpassing founder Stephen Burn’s stake of 17.2 per cent, according to Refinitiv.

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Lordstown will use the proceeds from the share sales to fund development and design activities for a new electric vehicle programme in collaboration with Foxconn, scrapping its earlier joint venture deal with the manufacturer, it said in a filing, sending its New York-listed shares up 13 per cent in after-hours trading.

Foxconn shares traded up 0.5 per cent on Tuesday.

The deal requires a review by the Committee on Foreign Investment in the United States (CFIUS), an interagency panel that reviews foreign investments for potential national security risks.

If CFIUS approval is granted, Foxconn is barred from pushing up its stake if it ends up owning in excess of 19.99 per cent of Lordstown’s voting shares, Lordstown said.

Separately, the startup reported a net loss of US$154.4 million in the quarter that ended Sep 30, wider than loss of US$95.8 million, a year earlier.

While demand for electric vehicles has surged globally, supply chain disruptions and rising material costs have made it tough for companies to raise output and meet red-hot demand.

Lordstown expects to limit production of the Endurance pickup truck through 2023 or longer to minimise losses until it is able to cut its materials cost.

The truck maker said on Monday that its cost of materials to build the Endurance was higher than the price it intends to sell at, adding that it would not see positive gross margins until its materials costs were reduced.

Lordstown CEO Hightower said the vehicle maker aims to deliver the first Endurance trucks to customers in the current quarter. REUTERS