Foxconn Picks Ohio Over Wisconsin
Company will buy former GM factory to build electric vehicles.
Wisconn Valley, as Foxconn’s mostly vacant Racine County manufacturing plant is known, will not become an electric vehicle manufacturing center. At least not for now.
The contract manufacturer announced Thursday that it will build electric vehicles in Ohio for startups Fisker and Lordstown at a former General Motors factory.
Taiwan-based Foxconn, as first reported by Bloomberg, will buy Lordstown Motors Corp‘s factory in Lordstown, Ohio. The electric truck startup announced a deal in late 2019 to buy the 6.2-million-square-foot plant, which GM operated from 1966 to March 2019.
The manufacturer will use the facility to construct Lordstown’s Endurance full-size pickup truck, while leasing a portion back to Lordstown. Foxconn will also manufacture a five-passenger electric car, currently known as Project PEAR, for California-based Fisker Inc. at the plant. Production, according to Foxconn, would start by the end of 2023.
“We have high expectations through this partnership that we will be able to successfully integrate our resources with Lordstown Motors. In addition to achieving the goal of moving ahead our timeline to establish electric vehicle production capacity in North America, it also reflects Foxconn’s flexibility in providing design and production services for different EV customers,” said Foxconn chairman Young Liu in a statement. “This mutually beneficial relationship is an important milestone for Foxconn’s EV business and our transformation strategy. I believe that the innovative design of the Endurance pickup truck, with its unique hub motors, delivers an advantageous user experience and has manufacturing efficiencies. It will undoubtedly thrive under our partnership and business model.”
Foxconn will also buy approximately $50 million worth of Lordstown stock as part of the agreement. In three years, it would have an option to buy up to 1.7 million more shares for $10.50 per share (the stock opened Friday at $8.79 per share and is currently trading at $7.23). GM also owns 7.5 million shares of Lordstown stock.
The agreement between Foxconn and Lordstown is non-binding and not finalized.
“The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and cost-efficient supply chain, while freeing up Lordstown Motors to focus on bringing the Endurance to market, developing service offerings for our fleet customers and designing and developing innovative new vehicle models,” said Lordstown CEO Daniel Ninivaggi in a statement.
Fisker CEO Henrik Fisker, in August, expressed concern with having his vehicle manufactured in Wisconsin when the company wouldn’t be legally able to sell it directly to consumers. A 1930s law requires manufacturers to sell vehicles through a dealership. Ohio has a similar restriction.
The Ohio deal leaves open the question of what exactly is happening with Foxconn’s Wisconsin facilities?
“While initial electric vehicle production takes place in Lordstown, Foxconn’s assets in Wisconsin will continue to serve as a potential location for additional investment for Foxconn’s electric vehicle growth in the United States and continue to be the location for data infrastructure hardware and information and communication technology production,” said the company in a statement. It has built four buildings on its campus, including a globe-shaped data center.
And regardless of what is built on Foxconn’s campus, a $791 million tax incremental financing district remains.
The State of Wisconsin remains on the hook for at least 40% of the local infrastructure costs if Foxconn walks away from an agreement with local governments to pay property taxes based on the original estimated value of its Mount Pleasant manufacturing campus. That agreement would allow Racine County and the Village of Mount Pleasant to recoup costs associated with the tax incremental financing district used to build local roads, sewer and water infrastructure. Foxconn is scheduled to start paying at least $31 million annually in property taxes in 2023, regardless of its actual property assessment.
Utility ratepayers are also committed to paying back $117 million in infrastructure costs, plus interest, on a substation and high-voltage power lines serving the campus.
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