Foxconn Needs Lordstown to Get EVs on the Road
(Bloomberg Opinion) -- On the surface, it looks like Foxconn Technology Group is bailing out troubled electric-vehicle maker Lordstown Motors Corp. by agreeing to hand over $280 million for some of its U.S. production facilities and shares. But the Taiwanese company isn’t in the habit of doing favors, and is seizing this opportunity to get a car onto the road and convince the global auto industry that it’s a viable player.
Lordstown is reeling after booting its founder and CEO Steve Burns over misstatements he made about electric-truck orders, and the company has flagged doubts to investors about its ability to stay in business. So it makes sense that Lordstown would sell its Ohio factory to raise cash, especially when a lot of that capacity is unused anyway. But with its Endurance trucks expected to roll off the production line early next year, Foxconn gets to notch up an early win in what remains the nascent stages of a global shift away from internal combustion engines.
This isn’t the first automobile deal that Foxconn has signed. Best known for assembling Apple Inc.’s iPhones, the Taipei-based company jumped into the EV market last year with a two-pronged approach: offer contract car-manufacturing services akin to what it does for Apple, and develop its own end-to-end vehicle platform, which it describes as the Android of cars.
While Foxconn has established street cred in electronics, the automobile industry wasn’t in a rush to embrace it. Tesla Inc.’s Elon Musk has gone on record saying that making cars isn’t the kind of thing you can outsource to Foxconn, a point with which I’ve disagreed. Yet the new entrant has been successful in signing up a number of large and small players, including traditional carmaker Stellantis NV, created from the merger of Fiat Chrysler and PSA Group, China’s Geely Automobile Holdings Ltd., and Los Angeles-based EV company Fisker Inc.
The MIH Consortium, a Foxconn-led group to create an open EV community, also boasts more than 1,500 members largely from electronics or vehicle components businesses. But for all the memoranda of understanding and letters of intent, nothing beats putting rubber on the road as proof that Foxconn is a viable carmaker.
That the first vehicle might come out of a former General Motors Co. factory in the middle of America’s rust belt also helps repair its damaged image in the U.S. With great fanfare, and the blessing of then-President Donald Trump, Foxconn bought up land and built factories in rural Wisconsin with a promise of $10 billion in investments, 13,000 jobs and a state-of-the-art flat-panel facility.
Little came of it. In March this year, Chairman Young Liu — who in 2019 took over the company, and that fateful deal, from founder Terry Gou — admitted he needs to “find a product that fits that location.” With this Ohio deal, electric vehicles are off the table for Wisconsin. Instead the company will look to use the 4-square-mile site as a base for electronics production including servers and network equipment.
That opportunistic switch to Ohio from Wisconsin highlights the urgency Foxconn faces. Under pressure from governments and customers, more traditional carmakers are turning electric, and in so doing, are finding ways to adapt. This creates a great opportunity for new businesses, but with the pace of transition speeding up, established players and upstarts are rushing to find partners. If companies, new and old, aren’t convinced early enough that Foxconn's plans are viable, then they’ll make alternative arrangements by either going it alone or working with rivals like Canada’s Magna International Inc.
Lordstown may have needed a savior, but Foxconn also needed someone to save.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
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