Lordstown Motors Corporation filed for bankruptcy protection and will file a lawsuit against its contract manufacturing partner, Foxconn, the company announced on Tuesday.
Lordstown filed for Chapter 11 protection in a Delaware bankruptcy court. The company also filed a legal complaint against Foxconn, the manufacturing arm of Taiwan’s Hon Hai Technology Group, best known for making Apple’s iPhone, accusing the company of fraud and breach of financial obligations.
The automaker was created to take over the former General Motors factory in the eponymous Ohio city, and uses the plant to manufacture an electric pickup truck called the Endurance. Lordstown sold the plant to Foxconn in 2021 for a reported $230 million as part of a deal that called for Foxconn to contract build the Endurance, invest in Lordstown, and for the two companies to jointly develop future vehicles.
Lordstown now claims that Foxconn “had no intention of honoring its commitments, particularly regarding the new vehicle development platform.” The company alleged that Foxconn used its partnership with Lordstown as a tool to maliciously and in bad faith destroy Lordstown’s business.
Endurance production began last fall, but Lordstown disclosed that only 31 trucks were built and 19 were recalled before production was halted in February. The company announced this in April production resumed.
In the meantime, Lordstown said it is focusing on its next electric car, which will be It is based on the Foxconn platform. But Lordstown in May warned of bankruptcy if Foxconn threatened to withdraw funding for the automaker.
In a deal struck last November, Foxconn agreed to invest $170 million in Lordstown in exchange for shares in the company. Foxconn previously invested $52.7 million in Lordstown as part of the deal, giving it an 8.4% stake. Reuters famous. Another $42.7 million due in May has not been paid. Lordstown accused Foxconn of withholding further investment under the deal, while Foxconn accused Lordstown of violating the terms of the deal when the automaker’s stock fell below the $1 per share threshold required for listing on the Nasdaq (for 30 days). . .
Foxconn is turning to making its own electric cars, though likely in other markets, and has other planned uses for the Ohio factory. It has contract manufacturing deals with other automotive startups, including IndiEV and Fisker.
This article was originally published by Motor Authorityeditorial partner ClassicCars.com
