On Thursday Foxconn, the world’s largest electronics manufacturer, agreed to purchase the plant of Lordstown Motors, the Ohio electric truck manufacturer, and $50 million of stock, for $280 million.
Foxconn is a Taiwanese company with substantial interests in China, including producing iPhones that are exported to the United States. The Chinese have substantial leverage over Foxconn, although it is Taiwanese, because of its operations in China.
Foxconn would acquire Lordstown’s 6.2 million square foot manufacturing plant and $50 million in stock. It would build the electric trucks and employ “agreed upon Lordstown operational and manufacturing employees,” according to StreetInsider.com. Lordstown’s role would be to market the vehicles.
The timing of the Foxconn/Lordstown deal is déjà vu all over again. In 2017, the first year of the Trump Administration, Foxconn wanted to build a plant in Wisconsin that would make panels for 75-inch television sets. Foxconn was going to get $4.1 billion in subsidies and build a $10 billion plant, generating 13,000 jobs. President Trump and Governor Scott Walker were photographed with shovels at the groundbreaking ceremony.
The project gradually got scaled back, until in April, 2021, Foxconn announced that it would invest $672 million, rather than $10 billion, and create 1,454 jobs, rather than 13,000.
Now Foxconn has picked another swing state, Ohio, and another project that is near and dear to the heart of the American president. President Joe Biden has made electrification one of his goals, and the purchase of an electric truck manufacturer that is having financial difficulties is sure to be popular with the Administration. Foxconn earlier this year notched an agreement with Fisker to build an electric car in two years.
Lordstown has had problems in the past, and needed the infusion of Foxconn cash. In March Lordstown was accused by Hindenburg Research of falsifying the 100,000 pre-orders for its electric trucks. Hindenburg wrote, “As with several companies in the space, Lordstown has never produced a saleable product and has no revenue. It has been beset by years of production delays which we expect will continue, based on evidence we present today.”
Although Foxconn is a Taiwanese company, the purchase showcases Chinese influence over America’s electric vehicle sales. Rather than allow Lordstown Motors to go bust, Foxconn has purchased it and injected cash. This is to China’s advantage, because China is lining up to sell America batteries to run its electric vehicles.
In contrast, gasoline for vehicles with internal combustion engines, about 97 percent of new vehicle sales in 2020, is produced in the United States. These vehicles are preferred by American drivers. Ford’s F-150 pickup truck is the best-selling vehicle in America.
Electric vehicles are supposed to be cleaner than vehicles that operate with gasoline. However, emissions also come from fossil fuels used to produce batteries, mining the ingredients for the batteries such as lithium, and transporting them from China, where most of them are made, and finding a way to dispose of them when exhausted.
China is one of the main producers of car batteries and the minerals, such as lithium, that are needed to make the batteries. In August the Chinese battery company Gotion High Tech announced two new plants in Jiangxi province in southern China to produce 100,000 tons annually of lithium carbonate.
Simon Moores, managing director of Benchmark Mineral Intelligence, warned the Senate Committee on Energy and Natural Resources in 2019 that “We are in the midst of a global battery arms race in which the US is presently a bystander… Those who control these critical raw materials and those who possess the manufacturing and processing know how, will hold the balance of industrial power in the 21st century auto and energy storage industries.”
Ford has just announced the construction of new battery plants in Kentucky and Tennessee, but production is only expected to start in 2025 and 2026. However, previous U.S. battery plants, such as the LG Chem battery plant, Ener1 of Indianapolis, and A123, whose groundbreaking was attended by President Obama, have disappointed investors.
President Biden’s plans to require half of new vehicle sales to be all battery electric by 2030, and California’s plans for all-electric sales by 2035, will increase the demand for Chinese batteries.
It is to China’s advantage to keep American electric vehicle companies such as Lordstown Motors going. But Foxconn’s bailouts are not necessarily helpful for the American driver or the American economy.
