Lordstown Motors has filed for bankruptcy protection in Delaware and put itself up for sale, the company said Tuesday. The U.S. electric truck startup also took legal action against Taiwan’s manufacturing giant Foxconn, accusing the electronics company of fraudulent conduct and broken promises for failing to hold up an agreement to invest up to $170 million. Lordstown went public via a merger with a special purpose acquisition company in 2020, and had warned investors in May that it could be forced into bankruptcy if Foxconn pulled its funding.
- The filings “set up an international business clash” that could lead to greater scrutiny of Foxconn’s EV plans and partnerships with automakers, per Reuters.
- Lordstown is also the latest in a number of aspiring EV manufacturers that have failed, notes The Wall Street Journal.
- Lordstown sold its Ohio factory, a former GM plant, to Foxconn in late 2021 following production issues.
By Riva Gold, Editor at LinkedIn News
Lordstown Motors files for bankruptcy, sues investor Foxconn
Dive Brief:
- Electric vehicle startup Lordstown Motors filed for Chapter 11 bankruptcy Tuesday after a failed deal with contract manufacturer and investor Foxconn.
- The company claims that Foxconn failed to deliver on a $170 million investment that was reported by Bloomberg in November 2022 to develop a scalable EV platform and build the Endurance electric pickup.
- In October 2020, Lordstown went public in a reverse merger with blank-check company Diamond Peak Holdings. The company’s shares are listed on the Nasdaq and lost over 95% of its value over the past 12 months.
Dive Insight:
Foxconn purchased the Lordstown Motors’ Ohio factory in November 2021 for approximately $260 million to take over production of the Endurance pickup. The deal included the creation of a $100 million joint venture with Lordstown to develop EVs for the global market. Foxconn — one of the world’s largest contract manufacturers — and Lordstown were working on a scalable EV development platform.
“Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders,” said Edward Hightower, Lordstown Motors CEO and president, in a press release.
Lordstown Motors officially revealed its Endurance pickup truck in June 2020, which included an appearance by former Vice President Mike Pence, who touted the return of manufacturing jobs to the Ohio region at the unveiling. The Endurance was primarily for commercial customers. Production of the Endurance pickup in Ohio began in September 2022.
However, Lordstown Motors’ financial troubles began mounting in June 2021, when founder and chief executive Steve Burns was accused by Hindenburg Research in March 2021 of misleading investors by inflating the number of orders it had for the Endurance. He claimed that Lordstown had more than 100,000 preorders for the Endurance pickup worth $1.4 billion, which wasn’t true as the orders were non-binding, according to a June 2021 SEC filing.
The fallout led to the sudden resignation of Burns and CFO Julio Rodriguez in June 2021, leaving the company’s future uncertain. The resignations of Burns and Rodriguez followed an internal board investigation into the claims made by Hindenburg Research. Burns recently sold his entire stake in Lordstown, Reuters reported last week.
Lordstown is seeking a buyer and will launch a marketing and sale process for the Endurance and related assets. The future of the former GM assembly plant in Ohio is unclear.
