Foxconn is investing another $70 million in Ohio’s Lordstown Motors to pursue revamped ‘EV program’

Global tech company Foxconn has announced it will invest at least another $70 million and up to $170 million total in EV startup Lordstown Motors. Foxconn’s $70M investment in Common Stock shares of Lordstown will help the company with its corporate strategy, while the two parties are shifting their previously announced $100 million joint venture into a Preferred Stock investment that will fund a “new EV program” run within Lordstown Motors instead.

Lordstown Motors Corp. ($RIDE) is an EV startup with a short but colorful history. The company swung for the fences early, as it hyped up its first vehicle – the Endurance pickup truck. With over 100,000 reported reservations in place, there was a lot to be initially excited about.

However, the Lordstown hype train began to slow down after one of the Endurance prototypes caught fire in early 2021, quickly followed by a less-than-stellar performance at the San Felipe 250, due to incorrect estimates of the pickup’s energy consumption.

By October 2021, the startup was shopping around its Ohio manufacturing plant with hopes that someone with more capital would come in and help build the Endurance EV. Chinese manufacturing expert Foxconn inevitably answered the call, completing the sale this past May alongside news of an $100 million investment in Lordstown Motors to form a EV joint venture.

As Endurance pickups begin to roll off assembly lines in Ohio, Foxconn has announced further investment in Lordstown Motors and is shifting some of those previously announced funds into stock to form a new EV development strategy.

Foxconn ups its ante in Lordstown Motors to build new EVs

According to a press release from Lordstown Motors Corp. (LMC) today, Foxconn Ventures Pte. Ltd. has agreed to invest up to $170 million in the EV business in exchange for stock, board seats, and other terms. Here’s how the new agreement breaks down.

Foxconn will make additional equity investments in LMC in the form of $70 million of the latter’s Class A common stock ($0.0001 par value per share) and up to $100 million of a newly created Series A Convertible Preferred Stock ($0.0001 par value per share). Per the release:

Upon completion of the Investment Transactions, Foxconn is expected to hold all of LMC’s outstanding Preferred Stock and 18.3% of its Common Stock on a pro-forma basis, and will have the right to designate two members of LMC’s Board of Directors.

Lordstown Motors shared that it intends to use the proceeds from the Common Stock sale for “general corporate purposes,” while the proceeds from the sale of the Preferred Stock to Foxconn will fund development and design under a “new electric vehicle program.” The companies explained that Foxconn’s $100 million direct Preferred Stock investment will replace the $100 joint venture funding promised earlier this year:

Termination of Existing JV Arrangement: LMC and Foxconn have agreed to terminate the existing joint venture arrangement between Lordstown EV Corporation and Foxconn EV Technology, Inc. The EV Program and future vehicle development are expected to take place within LMC.

The agreement is expected to complete an initial closing around November 22 and will include a number of terms like voting and participation rights, plus board representation of two Foxconn designees. Lordstown’s Endurance pickup is expected to go on sale before year’s end and could soon be joined by additional EV models under the new development program funded by Foxconn.

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