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Foxconn officially buys Lordstown Assembly


Foxconn officially buys Lordstown Assembly

Best known for manufacturing small electronics for companies around the world, Foxconn will soon branch out to assemble automobiles in Ohio. On Wednesday, Taiwan’s Hon Hai Precision Industry Co. (trading as Foxconn) reached an agreement with Lordstown Motors to buy a 6.2 million square foot factory that was owned by General Motors.

The $230 million deal leaves Foxconn with the facility and 400 Lordstown manufacturing employees it is supposed to use to assemble the delayed Endurance pickup. Although the long-term plan is to use the plant to become a contract manufacturer similar to Magna Steyr, with a focus on all-electric vehicles.

Although Foxconn is taking over production, Lordstown Motors remains responsible for vehicle development, parts supply, testing protocols, regulatory approval and sales. Although the arrangement is slightly confusing, the Taiwanese company plans to invest $100 million in a joint venture to design new electric vehicles with Lordstown based on its own “Mobility in Harmony” (MIH).

Foxconn calls the MIH an “open ecosystem” and has encouraged just about every automotive entity to work with it to develop a new platform that “provides an environment where all major EV functions such as chassis , batteries, ADAS (Advanced Driver Assistance Systems), cybersecurity, cloud connectivity, BMS (Battery Management System), and many more can be developed.

Lordstown CEO Dan Ninivaggi told Cleveland.com that the deal gives his business scale — something he’s worried about ever since Endurance’s 2020 delays began. Ohio thinks it can alleviate supply chain issues, save itself money in the long run, and finally get vehicles out of the factory.

“The key theme of the whole transaction with Foxconn if it gives us a more flexible and less capital intensive business model,” he said.

Subsequent interviews have shown that Ninivaggi is convinced that Lordstown is in a strong position in all but one respect. However, this is supposed to be resolved now that help has arrived from abroad – partly anyway.

“We have about 250 engineers, product development people, mostly in Farmington Hills [Mich.] and Irvin [Calif.]. We have purchasing, quality, everything but manufacturing,” the CEO said. Automotive News.

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The cash injection from the deal may not be enough to ensure production of the Endurance begins on schedule this fall, Ninivaggi said. The company is working to raise an additional $150 million so it can maintain its planned start of limited production in the third quarter.

Lordstown announced this week that its first-quarter loss narrowed to $89.6 million from a loss of $125.2 million a year earlier. It had a cash balance of $204 million, down from $587 million a year earlier. He had received $200 million in installments for his assets from Foxconn.

Even if Lordstown eventually folds, the facility already has other EV startups on the hook. Fisker is taking deposits for an affordable, high-volume electric vehicle it calls the pear, and management said the model will be built at the Lordstown, Ohio plant. There has also been speculation that Apple could finally move on to Project Titan, leveraging its close ties with Foxconn to finally build an all-electric vehicle that has been said to be in development since 2014.

It’s just luck that the factory doesn’t have a lot of tall windows. Foxconn unfortunately developed a reputation for violating labor laws in China after its high-profile installation of suicide nets at an iPhone factory in Shenzhen. Hon Hai Precision Industry Co. has also been accused of withholding payment, ignoring safety training and employing far more workers than allowed under Chinese labor laws. This is particularly troubling given the limited nature of the protections the country allows for employees and the persistent nature of these charges. Foxconn and Apple have even been implicated for knowingly benefiting from forced labor (slavery) supported by the Chinese government. But that’s just one of many multinational companies (including some automakers) bearing this stain on their portfolio at this point.

[Image: General Motors]

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