Lordstown Motors sues Foxconn and declares bankruptcy
The car manufacturer previously declared a $171.1 million loss for 2023's first quarter.
Lordstown Motors is having an eventful day, to say the least. The Ohio-based EV startup has filed for Chapter 11 bankruptcy protection in hopes of finding a buyer and is suing its investment partner, Foxconn Technology, for breach of contract and fraud. In its suit, Lordstown claims Foxconn's actions "had the intended effect of destroying the business of an American startup."
Foxconn, primarily known for assembling Apple's iPhones, bought Lordstown's Ohio factory in late 2021 (around when General Motors jumped ship) and a year later agreed to invest another $170 million through the purchase of common shares and newly created preferred shares. But, in April, Foxconn threatened to terminate the deal, claiming that Lordstown's stock dropping below $1 per share for 30 trading days in a row represented a breach in their agreement. The car manufacturer said the claims had no merit and accused Foxconn of acting in "bad faith" to get control of the factory and its workers without intending to support Endurance, its first pickup EV.
The decision to declare Bankruptcy doesn't exactly come as a surprise — in May, Lordstown said production would likely stop "in the near future" and that the company would file if its deal with Foxconn didn't proceed. Lordstown also reported a $171.1 million loss for 2023's first quarter.
Endurance has also faced continual problems from production to the final product. Even after Foxconn bought the factory, Lordstown failed to meet its forecasted vehicle production numbers for 2022, cutting it from 500 to 50 trucks. Then came an underperformance in miles, with the Environmental Protection Agency recently rating the pickup's range as just 174 miles versus its promised 250. Its competitors, the Ford F-150 Lightning and the Rivian R1T, can go 240 and 289 miles, respectively.
