Taiwanese electronics manufacturer Foxconn has begun production of Lordstown Motors’ electric pickup.
The news that Bloomberg taking first is a milestone for both companies: Foxconn, as it diversifies from manufacturing consumer electronics like iPhones to electric vehicles, and Lordstown, as it finally gets its long-awaited Endurance truck off the production lines and, hopefully, into customer hands. .
Since going public through a special purpose merger (SPAC) in 2020 – a move that in hindsight is the demise of most EV SPACs – Lordstown has struggled to get into production. Last summer, the company increasingly warned that it might not have enough money to market its EV, but it was bailed out by an investment firm that agreed to buy $400 million worth of shares over a three-year period.
The company lost some weight by selling its Lordstown, Ohio plant, which it had previously purchased from General Motors, to Foxconn for $230 million. Foxconn agreed to make Lordstown’s EVs for it, but the company will also use the Ohio plant to produce EVs for Fisker, another EV SPAC.
Production volume of the Endurance pickup is set to rise slowly, with a slight crescendo in November and December, due to those pesky supply chain constraints, according to a pronunciation from Lordstown. Very slowly, it seems. So far, two commercial release production vehicles have rolled off Foxconn’s production line, with the third “expected to be completed shortly.” Three down, 47 to go – Lordstown plans to deliver around 50 units to customers from the fourth quarter, and the rest of the first batch of 500 units in the first half of 2023, if it can raise more money.
That caveat is essential and may be one of the reasons why, despite this milestone, Lordstown’s stock is down 7.18% at 12 noon ET. It turns out that building electric vehicles from the ground up is incredibly difficult and expensive, a hard truth that fellow EV SPACs Nikola and Lucid Motors are also coming to grips with as they too try to raise additional capital.
Lordstown said it will close the quarter and year with approximately $195 million and $110 million in cash and cash equivalents, respectively. But that probably isn’t enough to scale production. To get more than 50 pickups, the company is looking to its old friend Foxconn, as well as other strategic partners, to get the money it needs to keep this business going. As part of Foxconn’s purchase of the Ohio plant, the two companies entered into a joint venture to co-develop EV programs, and it’s this spring that Lordstown will try to drain. Foxconn, which owns 55% of the joint venture, has already loaned Lordstown $45 million to support the EV maker’s own capital commitment to the joint venture.
It’s worth noting that Foxconn’s reputation for delivering isn’t exactly pristine either. The company has struggled to get a planned $10 billion LCD factory in Wisconsin off the ground — a project former US President Donald Trump once called “the eighth wonder of the world.” Earlier this month, Foxconn cut its planned investment factory to a paltry $672 million and the number of new jobs reduced from 13,000 to 1,454.