Lordstown Motors, a U.S.-based electric truck manufacturer, has filed for Chapter 11 bankruptcy protection and initiated legal action against Taiwan’s Foxconn, its largest shareholder and former partner. The company’s move comes after failing to resolve a dispute over a promised investment from Foxconn.
Lordstown Motors, known for its Endurance electric pickup truck, filed for Chapter 11 protection in a Delaware bankruptcy court. The company accused Foxconn of fraudulent conduct and a series of broken promises regarding an agreement to invest up to $170 million in the electric-vehicle manufacturer. Lordstown alleged that Foxconn misled the company about collaborating on vehicle development plans.
Foxconn, a major Taiwanese electronics manufacturer, had previously invested around $52.7 million in Lordstown and currently holds an 8.4% stake in the company. Lordstown claims that Foxconn is refusing to purchase additional shares of its stock as agreed, breaching the investment agreement. Foxconn, on the other hand, stated that Lordstown breached the agreement when its stock fell below $1 per share. The Taiwanese company suspended negotiations with Lordstown and expressed its intent to pursue legal action. The legal battle between the two companies could shed light on Foxconn’s electric vehicle ambitions and partnerships with other automakers.
Lordstown’s bankruptcy filing aims to facilitate the search for a buyer. The company does not currently have an initial offer, known as a stalking-horse bidder, which would set a minimum price for potential buyers to exceed in an auction. Lordstown’s CEO, Edward Hightower, expressed that the Endurance business could be attractive to another automaker looking for a quick entry into the EV market, especially given the current U.S. administration’s focus on transitioning away from gasoline-powered vehicles.
Lordstown Motors’ bankruptcy filing and legal action against Foxconn mark a significant development for the company, which was once hailed as a potential success story in the electric vehicle industry. The filing demonstrates the challenges faced by EV startups and the intense competition within the market. Lordstown’s struggles also have implications for Ohio’s Mahoning Valley region, which has been seeking to revitalize its economy through electric.
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