LORDSTOWN, Ohio – Electric-vehicle manufacturer Lordstown Motors Corp.’s $230 million partnership with Hon Hai Technology Group, better known as Foxconn, points to an entirely new direction for the plant in Lordstown.
Changes in the company’s executive team reflect this as well with Lordstown Motors appointing a new president and vice president of operations who have ample experience with vehicle launches.
Regardless, the EV startup still must contend with steep challenges as it launches its first commercial vehicle, the Endurance pickup.
“It’s not all about Foxconn. We’re focused on the Endurance. We know we’ve got to get that truck out,” Lordstown Motors CEO Daniel Ninivaggi told analysts Nov. 11 following the release of the company’s third-quarter earnings.
The company pushed back production of the Endurance pickup until the third quarter of 2022, and said it will continue to produce pre-production and validation models through this year and into the first quarter of next year.
In September, Lordstown Motors said that it expected deliveries would begin during the second quarter of 2022.
Ninivaggi said the delays result from supply-chain issues and components shortages.
“It’s been a challenging quarter with raw materials shortages, parts shortages, supply-chain disruptions – particularly from international sourcing,” he said. “We’re doing everything we can to mitigate it and you have our commitment we’re going to do everything possible to get the truck out on our revised schedule.”
Lordstown Motors is expected to build about 100 pre-production vehicles over the next three months, he said.
The CEO stated that the Endurance has attracted non-binding interest from commercial enterprises, including fleet management companies.
Ninivaggi also presented an update on its partnership with electronics giant Foxconn, which has entered the EV market.
On Nov. 10, Lordstown Motors announced it had signed an asset purchase agreement with Foxconn, allowing that company to acquire the manufacturing plant in Lordstown for $230 million. The deal excludes the hub motor assembly line in the plant and battery pack production line.
According to the deal, Foxconn will pay Lordstown installments of $100 million on or about Nov. 18, $50 million by Feb. 1, 2022, and another $50 million no later than April 15, 2022. The remaining $30 million would be paid during closing.
U.S. Rep. Ryan, D-13 Ohio, called the announcement the “beginning of the renaissance” of the Mahoning Valley and the region and a “grand slam” during a phone interview Nov. 10.
“A hundred years from now or 50 years from now, there’s going to be the Mahoning Valley before the Foxconn deal and the Mahoning Valley after the Foxconn deal,” he said. “This is the break we’ve been waiting for a long time.”
Lordstown Motors employs 400 at the plant.
Upon the deal closing, Foxconn would receive 1.7 million warrants to acquire Lordstown common stock, exercisable for three years, at a price of $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, in a statement.
In October, Foxconn made an equity investment in Lordstown Motors of $50 million at approximately $6.90 per share.
Other points of the agreement call for the parties to pursue a deal that would allow Foxconn to serve as a contract manufacturer for the Endurance, Ninivaggi says.
That agreement must be enacted before the asset purchase deal closes, scheduled for April 30.
The asset purchase also enables Foxconn to leverage Lordstown Motors’ 6.2-million-square-foot plant – the former General Motors Lordstown complex – to produce vehicles with other strategic partners.
Fisker Inc., for example, has said it would manufacture its project PEAR at Lordstown under a partnership with Foxconn.
Lordstown Motors and Foxconn have also agreed to pursue a joint venture in which they would co-design, engineer and develop vehicle programs for the commercial market in North America and internationally.
These vehicles would be built on Foxconn’s MIH open EV platform, Ninivaggi said.
“It is relatively new,” the CEO says, noting that Foxconn unveiled three models last month that are built on this platform. “We’ve already started doing design concepts off one of those vehicles. It is a commercial van,” he said.
Two additional variants of that design could also be developed, Ninivaggi says. The model would have an appeal both in the North American and global markets. “Foxconn, I think it’s fair to say, is very excited about it,” he said.
“In my view, this transaction provides Lordstown 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,” Ninivaggi said.
The proposed joint venture was one factor in naming Edward Hightower as Lordstown Motors’ new president, replacing Rich Schmidt in that role.
“I brought Ed Hightower in about a month ago to do a deep-dive analysis of opportunities on MIH,” Ninivaggi said. Hightower has extensive launch experience with companies such as General Motors, BMW and Ford Motor Co.
On Nov. 10, Lordstown Motors announced the appointment of Hightower as its president, effective Nov. 29.
Hightower currently serves as managing director of Motoring Ventures LLC and has been advising Lordstown as a consultant, the company said. He has 30 years of experience serving in product development, engineering, manufacturing, commercial, and senior executive roles at Ford Motor Co., BMW and General Motors.
While at GM, Hightower led the automaker’s $15 billion global crossovers business as its executive chief engineer and vehicle line executive. At BMW, he helped to drive 5 Series sales, market share, and profitability in the United States to record levels.
Schmidt, the outgoing president who helped Tesla to launch its S, X and 3 models, joined Lordstown Motors in 2019 as its chief production officer under former CEO Steve Burns and was appointed its president in 2020.
Burns resigned in June 2021 after an internal investigation found that executives had exaggerated preorders of the Endurance pickup. The U.S. Securities and Exchange Commission and the U.S. Department of Justice have launched investigations into the company’s preorders and its merger with blank check company DiamondPeak Holdings Corp., which took Lordstown Motors public in October 2020.
Also, the company announced that Shea Burns has been appointed senior vice president, operations. In this role, Burns will support efforts to launch the Endurance.
These latest executive appointments are designed to focus company resources on its key near-term objectives: bringing the Endurance pickup truck to market, developing its strategic partnership with Foxconn, and strengthening its engineering capabilities for future vehicle development, the company said.
The potential manufacturing agreements with Foxconn are also likely to alter the tech content of future vehicles, Ninivaggi said.
For example, not all future vehicles will include hub motors, the signature feature of the Endurance. Instead of a single engine, hub motors are separate electric motors that drive each wheel.
“Hub motors are really important for the pickup truck and will be definitely part of our product portfolio going forward,” Ninivaggi said. However, the use of hub motors in other models would have to be evaluated.
Lordstown Motors reported Nov. 11 that it posted a net loss of $95.8 million for the three months ended Sept. 30 and cash on hand of $233.3 million as of that date.
The company said it expects to have between $150 million and $180 million in cash by Dec. 31, 2021.