Electric Vehicle Startup Once Praised as a 'Savior' Files for Bankruptcy
The commercial electric vehicle startup Lordstown Motors Corp. has filed for Chapter 11 bankruptcy protection nearly two months after it warned that it was in danger of failing.
In early May, the electronics company Foxconn wavered on a $170 million investment in Lordstown.
The Ohio company said in a regulatory filing at the time that it had received notice from Foxconn on April 21 that it was in breach of Foxconn’s investment agreement because it had received a delisting warning from Nasdaq two days earlier.
Lordstown said at the time that given the uncertainties, there was substantial doubt it could continue as a going concern.
The company was in danger of being delisted from the Nasdaq because its share price closed below $1 on March 7 and continued to falter after that.
Foxconn told Lordstown at the time that it might unwind their agreement if the EV maker did not resolve its listing issues.
Lordstown said in May that it had notified Foxconn that, among other things, it believed the breach allegations were without merit and that the terms of the investment agreement didn’t allow Foxconn to end the deal following the initial closing.
Lordstown said Tuesday that it was filing a lawsuit against technology company Hon Hai Technology Group and certain affiliates, including Foxconn.
It said the lawsuit “details Foxconn’s fraud and willful and consistent failure to live up to its commercial and financial commitments to the company” and claimed Foxconn’s actions led to material damage to Lordstown and its future prospects.
Lordstown said it’s also looking to sell its Endurance pickup and related assets. The company said restructuring under Chapter 11 will help with the sale process of Endurance and speed up the timeline for hearing its lawsuit against Foxconn.
In November, the company announced that it had received approval to ship the first batch of Endurance trucks.
Stop by Booth #6009 at @WorkTruckWeek for a look at the all-electric Endurance™ truck.
The Endurance™ has also been equipped with truck accessories for the commercial fleet market in Booth #801 with JB Poindexter/LEER Group and Booth #1243 with ECCO. #WorkForIt #TakeCharge pic.twitter.com/oGz4ncKwoI
— Lordstown Motors (@LordstownMotors) March 9, 2023
Cincinnati Bengals quarterback Joe Burrow was enlisted as an ambassador for the brand.
Our brand ambassador, @JoeyB, and the all-electric Endurance™ have a lot in common: the ability to overcome a challenging environment.
Whether on the playing field or the job-site, both are built to#WorkForlt.#RIDE #RideWithLordstown pic.twitter.com/XXg3eh8EBs
— Lordstown Motors (@LordstownMotors) September 12, 2022
In 2019, Lordstown was “lauded by former President Donald Trump as a savior” for a small Ohio town of the same name when it took over a former GM factory to build its Endurance trucks, The Wall Street Journal reported.
GREAT NEWS FOR OHIO! Just spoke to Mary Barra, CEO of General Motors, who informed me that, subject to a UAW agreement etc., GM will be selling their beautiful Lordstown Plant to Workhorse, where they plan to build Electric Trucks. GM will also be spending $700,000,000 in Ohio…
— Donald J. Trump (@realDonaldTrump) May 8, 2019
Lordstown said that it is entering Chapter 11 with significant cash on hand and is debt-free.
The company’s stock plunged more than 65 percent before the market open.
The Western Journal has reviewed this Associated Press story and may have altered it prior to publication to ensure that it meets our editorial standards.
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