Lordstown Motors files for bankruptcy and takes legal action against Foxconn

Lordstown Motors is experiencing a tumultuous day, as the electric vehicle company from Ohio has submitted a request for Chapter 11 bankruptcy protection in an attempt to locate a purchaser. Additionally, the company is taking legal action against its investment partner, Foxconn Technology, for violating the contract and committing fraud. Lordstown alleges that Foxconn’s actions were deliberate and aimed at ruining the operations of an American startup.

Foxconn, known primarily for assembling Apple’s iPhones, bought the Lordstown, Ohio plant in late 2021 (around the time General Motors jumped on board) and a year later agreed to invest another $170 million through the purchase of common stock and newly created preferred stock. But in April, Foxconn threatened to terminate the deal, arguing that Lordstown’s stock falling below $1 a share for 30 consecutive trading days constituted a breach of contract. The automaker said the claims had no merit and accused Foxconn of acting in “bad faith” to gain control of the plant and its workers without any plans to support the Endurance, its first pickup EV.

The decision to file for bankruptcy isn’t exactly a surprise — in May, Lordstown said production would likely stop “for the foreseeable future” and that the company would file if its deal with Foxconn didn’t go ahead. Lordstown also reported a loss of $171.1 million for the first quarter of 2023.

Endurance has also faced ongoing problems from production to final product. Even after Foxconn bought the plant, Lordstown fell short of projected vehicle production numbers for 2022, dropping from 500 to 50. Then came poor mileage performance, with the Environmental Protection Agency recently rating the pickup’s range at just 174 miles, compared to the promised 250 miles. Its competitors, the Ford F-150 Lightning and the Rivian R1T, can travel 240 and 289 miles, respectively.