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Apple Supplier Foxconn Agrees to Buy Ohio Car Factory for $230 Million
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Wonderful news for the local economy. Think of all the children of Ohio that’ll finally have work.
I'm never buying an Apple car. Would you buy a car that doesn't come with windows?😲😐🤦♂️
I've been waiting a long time for another Apple car rumor to use this Dad joke.😏
I've been waiting a long time for another Apple car rumor to use this Dad joke.😏
First they = Lordstown Motors, second they = GM/LG?
Lordstown hasn't been the most upright startup so far. They have a very convoluted history. https://en.wikipedia.org/wiki/Lordstown_Motors One of their prototypes/drivetrain mules even burst into flames earlier this year during a test drive.
I have one nit to pick with your post. The part about a bankruptcy being the "right thing to do" isn't quite right. Sure it may have been the right thing for GM, but it would have effected all of their suppliers, which would have probably resulted in the closing of even more factories in the USA, further weakening our manufacturing base and sending even more production to China.
"Michigan" and "Wisconsin" were the same project.
"... Foxconn Technology Group’s massive $10 billion investment got away from Michigan, and that's turning out to be a good thing. ..."
https://www.detroitnews.com/story/b...michigans-miss-foxconn-vindicated/2722819002/
There have been other projects in the USA (and elsewhere) that Foxconn has 'flaked' on .
Foxconn’s history of broken promises casts a shadow on Wisconsin news
News that the iPhone maker will open a plant in Wisconsin was much ballyhooed late Wednesday, but not everyone is cheering.
www.marketwatch.com
They only get tax benefits if have something to be taxed on. They can't pocket what they didn't have/own/make. Low (or no) property taxes on a fully flushed out $1B factory infrastructure is one thing and a large block of empty flat land is another.
And if there were economic development grants provided and the State/Local government didn't have claw-back clauses for doing nothing , then it isn't Foxconn that is the problem there. It would incompetent gov folks and whoever they foolishly paid for (incompetent) legal assistance.
It is vastly different in that the factory is already there. There pragmatically is nothing to "build" here at all. GM sold the factory to Lordstown Motors for around $20M. It is worth well over $200M (GM left robots , jigs, paint shop ,etc.. esssentialy all of it. Even if Foxconn haggles a bit on price Lordstown Motors will make a profit as long as over $200M. Have a seller that is going broke and a buyer with a pocket of cash. That has much better chance of going through.
Labor wise though.... yeah. It isn't the "cheapness" of the labor but the 'wildcat' local Unions . These are much higher priced products though. Foxcoon building the $400-500 phone for Apple (that Apple sells at higher markup) is different than at ( $30-40K car/truck that is marked up by "car markers" too small to have their own factories. ). This would be a new business skill/market that Foxconn would be going into. So they can't really take the "mature , large " business from China and bring it to the USA. They don't make cars now in China. ( they are in a joint venture with a car manufacturer there ... so on the learning curve).
Fisker is a USA based car company. If want to do contract car production for them then this is a car/sedan plant that i pretty much ready to go. It just needs some vehicle to make. If Fisker and Lordstown businesses collapse and much later Apple is looking for a contract factory... it still could work out. ( If The Fed goverment throwing giant wads of subsidies at these companies that will help keep Foxconn focused. )
There’s no Apple Car news tied to this.
There is Foxconn and Fisker as the potential.
But Lordstown needs the money badly. They are 90 days or less from bankruptcy and may never ship a truck to the public without this money.
As for Foxconn, con is their name. Just ask Wisconsin. It’s more likely nothing will be be built there by Foxconn. Hopefully, Lordstown will grow and just buy the plant back in 3-5 years, if they last.
There is Foxconn and Fisker as the potential.
But Lordstown needs the money badly. They are 90 days or less from bankruptcy and may never ship a truck to the public without this money.
As for Foxconn, con is their name. Just ask Wisconsin. It’s more likely nothing will be be built there by Foxconn. Hopefully, Lordstown will grow and just buy the plant back in 3-5 years, if they last.
the factory is in Ohio. What has that to do with "overseas manufacturing" ?
Apple doesn't make anything. That is why they sit on wads of cash They largely outsource manufacturing. Especially staffing of the production lines. [ Sometimes they buy equipment that they barter with the contract manufacturer with. "You make the stuff for us on discount and we'll buy the expensive rig that we demand you use that you can't afford." ]
Apple is going to run into problems making a car overseas (if the car R&D spent so far isn't a huge boondoggle) . Their hand waving that there are no "tool and die" vendors here in the USA or component subcontractors to make their product subcomponent is weaker than water when there is a multiple $B car industry and component makers here in the uSA.
Lordstown Motors truck has nothing to do with GM. ( Other than GM is a substantive stockholder in the company ... which won't be worth much if they go bankrupt).
GM sold the factory to Lordstown Motors at a huge discount (about $20M it is worth over $200+M ).
GM and LG are building a battery plant almost "behind" this plant. But that is primarily suppose to be for GM's battery needs.
GM has their own trucks with their own battery and motor designs coming that are entirely independent of what Lordstown Motors is doing.
GM has huge history with this factory. I wouldn't be surprised is that were some "right to first offer" if Lordstown goes bankrupt for GM to buy the factory ( since it was sold so low ). I don't think they wanted the factory to fall into the hands of a major competitor that it could use to "beat them up", by out producing them.
[ GM also got pushed into deal because Ohio and local goverments had given them some huge tax breaks to keep the factory open and GM closed it away a couple of years later. Some of those they had to pay back , but getting the deal down with Lordstowns/Workhorse helped mitigate that amount and political/media fallout. ]
That is never going to happen. Lordstown got the factor for $20M and couldn't afford it. How are they going to buy it back for $250-450M several years down the road?
They don't have a factory. So they have to use contract manufacturers to make the truck. Foxconn isn't going to charge them subsides prices to do that . The local union is going to try to push wages and benefits back up to big-three car marker levels. And their truck competition is going to be intense. So the R&D costs to stay competitive aren't going to low either. When the loyal RAM , F-150 , and Silverado buyers have electric options to buy that they like... they probably will buy them.
Lordstown Motors can survive is they hustle, design, and deliver a series of good products. but are they going to have a license to "print money"? Probably not. Their markup over what Foxconn delivers the truck at is going to be limited. The more successful they are in making the truck at the plant they don't own, the less likely the plant owner is going to be to sell the plant. If they are successful the price of the plant will go up.
Interestingly, I believe there is Apple Car news tied to this, but not in the way everyone is talking. If FoxConn purchases stock in Lordstown then it would be logical to assume that they would sell that stock if they enter a partnership with a direct competitor....such as Apple. So essentially I am reading that if this deal goes through, that Foxconn is not thinking that they will be building anything car related for Apple anytime soon.
They need someone to build cars (if they really do such a thing), and it sounds like no one else was willing to agree with Apple. So no really choice with what the sides want.
Did Apple have something to agree to? From the outside there has been some fog as to just how custom a "car" Apple wanted to make. If they want to do their own "everything" from the ground up then yeah ... most "sane' builders probably aren't going to want to work with them.
If Foxconn has some other customers running through the Lordstown plant they may not want to deal with Apple either if that is the path Apple is on.
First, Lordstown Motors is in the "workman"/"contractor" pickup truck business. Heavy F-150, RAM, Silverado .. etc. Apple isn't making one of those at all. Apple isn't going to be anywhere close to that business.
Apple is going to make a 'car' for upper 5-10% of the market. Or robo-taxi fleets or something like that. Doubtful they'd do some quirky variant like Tesla's "cybertruck"... which is joke
Fisker's vehicle maybe. But Fisker has their own issues of getting something into production that can "consume" production line capacity.
Second, Foxconn's investment in Lordstown is partially to keep them afloat so they can buy services from the factory (i.e., can hire Foxconn to do work). Somewhat similar to GM buying shares in Lordstown so that they could produce something to "occupy" production (i.e., give jobs) to the factory . If Lordstown lasts long enough and Foxconn gets a wider set of customers they'll probably unload the Lordstown share (hopefully for a profit).
Lordstown Motors isn't a full production yet but they have been putting things into place to start production in 2-4 months. So if they go bust in the short term then Foxconn has a factory and no customers who want something built there. They would be getting negative return on their investment. Nothing.
If Foxconn was buying this from an otherwise healthy company that would be different. They aren't. Lordstown M is going to have to turn around and spent a decent chunk of the $200M they'll get for selling to plant right back to Foxconn to pay for trucks to be delivered to them so they can in turn sell them. For better or worse , Lordstwon M is Foxconn's best chance at a paying customer for more than several quarters into the future.
Apple would be a customer that could pay the bills. Over the much longer term , that is what Foxconn will need to pay the bills at the plant. Right now they have two relatively "broke" customers lined up
P.S. They don't absolutely need Apple. If one of the Chinese car makers wants to break into the USA market in several years then this could be a easier path for them. Apple isn't the only company on the planet with money.
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I think the bigger reason the US isn't viable for assembly at this point is the inability to get 100k+ assembly workers skilled in the necessary techniques into a tightly packed area - assembling in China offers economies of scale that the US can't match, at least for now - they take "factory town" to whole new level. Assembly in the US will be more viable when they can automate more of it.
Probably nothing new. If Lordstown Motors got a contract with governments that followed the factory and contingent on the vehicles being made there .... then they are on track to still be made there ... so tax breaks could "transfer" on change of ownership of the factory.
Foxconn getting something one top of what Lordstown had already ? Probably not. Lordstown got a huge deals from local , state , etc. because they were "underdog" buying a huge , (relatively) oversized infrastructure. [ Feds indirectly also because Trump had made campaign promises that plant would never close ... and yet it did. So executive branch leaned in on making that reverse. ]
GM would probably never have sold this factory to Foxconn at this price at all. Foxconn doesn't really need tax breaks here; they are getting it at a discount. GM would have "ate" the cost as a write-off rather than sell at this price. Lordstown Motors doesn't really have a choice if they want to survive at all. That probably means they are selling at a discount.
Lordstown was actually using GM parts to make their Endurance truck, and the initial examples produced were made with a Silverado body. Plus GM invested in the company, so it’s not just the factory they’re using.
to a point, it doesn’t really matter, as my bets are that the Lordstown brand and products won’t survive. Not that there is much to kill off at this point.
That was my first thought. Plant size would make for a huge manufacturing space for Apple Products other then cars.
I dont disagree with anything you said. I was not commenting on the state of Lordstown or Fisker or GM. I was not commenting on whether those companies need cash infusions. The point I was making is still relevant. Businesses don't own stock like people do. It is a sign of partnership when one company buys stock in the other and it would be a huge PR nightmare for Foxconn to own stock in an electric car company while producing electric vehicles for another. Just no reason for the hassle, they would simply sell the stock. So if we see Foxconn selling off its stock, it COULD be an early indicator they are entering into a partnership with Apple. It also might mean nothing related to Apple and only have to do with things you have already mentioned. However, it is FAIRLY safe to assume no partnership is in place while they retain the stock.
The Cavaliers and Cobalts were total gems compared to the car that rolled off that line before them… the Chevy Vega.🤣
The biggest issue Lordstown Motors has is their main product right now is a conventional looking electric pickup truck… then this showed up…
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Foxconn is well rooted. As long as the geopolitical risks are contained, Apple's supply chain is quite resilient to other risks.