To put it mildly, today has been quite the roller coaster for Lordstown Motors. The Ohio electric vehicle firm is suing its financial partner, Foxconn Technology, for breach of contract and fraud and has filed for Chapter 11 bankruptcy protection in the hopes of selling itself. Lordstown states in its lawsuit that Foxconn “had the intended effect of destroying the business of an American startup.”
Foxconn, best known for manufacturing Apple’s iPhones, purchased the Lordstown, Ohio, facility in late 2021 (about the time General Motors abandoned ship) and committed to investing an additional $170 million the following year through the acquisition of common shares and newly minted preferred shares. Foxconn, however, threatened to end the contract in April, citing a breach of the agreement caused by Lordstown’s stock price remaining below $1 for 30 consecutive trading days. The automaker said Foxconn was working in “bad faith” to gain control of the facility and its employees without intending to promote Endurance, the company’s first pickup EV, and that the charges were without foundation.
Lordstown Motors Posts $171 Million Deficit in First Quarter of 2023
The decision to file for bankruptcy is not entirely unexpected; back in May, Lordstown warned that production would end “in the near future” if the arrangement with Foxconn fell through. For the first three months of 2023, Lordstown also posted a deficit of $171.1 million.
From its inception to its release, Endurance has had nothing but trouble. Lordstown nevertheless fell short of its projected vehicle production projections for 2022, reducing them from 500 trucks to 50 after Foxconn purchased the business. Then the mileage failed to live up to expectations; the EPA has now rated the pickup’s range at only 174 miles, much short of the advertised 250. The Ford F-150 Lightning and the Rivian R1T are two of its main rivals, and both of them have longer ranges.
Lordstown Motors has been struggling financially for some time. The company has been unable to meet production targets for its Endurance electric pickup truck, and it has been losing money. The failure of the Foxconn investment was the final straw for Lordstown Motors.
Lordstown Motors alleges that Foxconn agreed to invest $170 million in the company in exchange for a stake in Lordstown Motors. However, Foxconn never made the full investment. Lordstown Motors is suing Foxconn for breach of contract.