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Lordstown Motors CEO Dan Ninivaggi on joint venture with Foxconn
5/16/2022
https://www.bizjournals.com/cleveland/news/2022/05/16/lordstown-motors-ceo-excited-by-foxconn-venture.html



Dan Ninivaggi remembers driving past General Motors' massive auto assembly plant in Lordstown Township, Ohio, in recent decades while taking trips to see family in New York.

Ninivaggi could not have imagined then that one day he would lead Lordstown Motors Corp. (Nasdaq: RIDE), the electric vehicle developer that now calls the 6.2 million-square-foot plant home.

Last week, cash-hungry Lordstown Motors sold the plant and much of its contents for $230 million to Foxconn EV Technology Inc., an Ohio corporation and affiliate of electronics giant Hon Hai Technology Group in Taiwan.

Foxconn, the electronics giant and EV-developer-come-lately, will make Lordstown Motors' first model, the Endurance electric pickup truck for the commercial fleet market, at the plant under a manufacturing agreement.

And Lordstown Motors and Foxconn plan to develop future EV models for themselves and other original equipment manufacturers (OEMs) at the plant through a $100 million joint venture.

Ninivaggi, who began his automotive career at Lear Corp. in 2003, talked with Cleveland Business Journal about the completion of the Foxconn deals and what that means for his EV startup.

This interview has been edited for clarity and brevity.

How does Lordstown Motors benefit from selling its plant to Foxconn?
The plant is a wonderful asset, but it's only productive if you fill it up. Foxconn has a much better chance of working with multiple OEMs to fill up the plant than we would on our own.

At the same time, through Foxconn, we have the manufacturing capacity to launch Endurance and future vehicles, but we don't have all the overhead and fixed costs.

And then, importantly, we have the vehicle development joint venture with Foxconn to come up with a pipeline of vehicles that will be built at that plant. Foxconn will be a better owner, a better steward of that plant than we are.

How else might Foxconn help your company?
Foxconn is a much bigger company with a lot of supply chain expertise and purchasing power, so it will help us reduce the bill of materials cost for producing Endurance. They're a world-class manufacturer with great software capabilities. That's really important for modern vehicles, particularly EVs, which have electronic components like batteries and motors.

How do you expect the joint venture to change Lordstown Motors?
The question that's been in the auto industry for as long as I've been around is, "How do small companies compete with big companies?" There are real advantages to scale. If you can commonize and standardize the components of your vehicle, as Foxconn does with its MIH (Mobility in Harmony) development platform, you can get to market faster and more efficiently — meaning less expensively.

The vehicles we design off MIH will be Lordstown Motors Corp.-branded vehicles. We'll also have the opportunity to license those vehicles to international OEMs that Foxconn has relationships with, so we'll get a lot more bang for our buck.

What's the timeline for raising the $150 million Lordstown Motors needs to buy tooling that will significantly lower the cost of producing Endurance?
When we get the vehicle into production and into customers' hands, if the vehicle's well-received — and we believe it will be — then people will get excited about it. That would give us more opportunities to raise money and scale the vehicle production. Now that we've closed the contract manufacturing agreement with Foxconn, we have time to sit down and jointly work out that plan.

Just to be clear, we have enough money to start production in the third quarter, as planned. And we have enough cash going into next year to be comfortable. But we're still focused on getting the $150 million and being well-capitalized for the next vehicle we develop.