Lordstown Motors Company has filed for chapter safety and is suing contract manufacturing companion Foxconn, the corporate introduced Tuesday.
Lordstown filed for Chapter 11 safety in a Delaware chapter court docket. The corporate additionally filed a authorized grievance towards Foxconn, the manufacturing arm of Taiwan’s Hon Hai Expertise Group finest recognized for making the Apple iPhone, accusing the corporate of fraud and failing to satisfy monetary commitments.
The automaker was shaped to take over the former Normal Motors manufacturing unit in its namesake Ohio city and use the plant to fabricate an electrical pickup truck known as the Endurance. Lordstown offered the plant to Foxconn in 2021 for a purported $230 million as a part of a deal that known as for Foxconn to fabricate the Endurance beneath contract, in addition to put money into Lordstown, and for the 2 firms to co-develop future automobiles.
2023 Lordstown Endurance
Lordstown now alleges that Foxconn “had no intentions of dwelling as much as its commitments, significantly with respect to the brand new car growth platform.” The corporate claimed Foxconn used its partnership with Lordstown” as a instrument to maliciously and in dangerous religion destroy Lordstown’s enterprise.”
Endurance manufacturing started final fall, however Lordstown disclosed that solely 31 vehicles had been constructed, and 19 recalled, earlier than manufacturing was halted in February. The corporate stated in April that manufacturing had resumed.
Within the interim, Lordstown stated it was shifting focus to its subsequent EV, which might be based mostly on a Foxconn platform. However Lordstown in Might warned of chapter if Foxconn adopted by way of with a risk to drag funding for the automaker.
2023 Lordstown Endurance
In a deal made final November, Foxconn agreed to speculate as much as $170 million in Lordstown in return for shares within the firm. Foxconn beforehand invested $52.7 million in Lordstown as a part of the settlement, giving it an 8.4% stake, Reuters famous. A further $42.7 million due in Might was not paid. Lordstown has been accusing Foxconn of balking at additional funding consistent with the deal, whereas Foxconn has accused Lordstown of breaching the phrases of the deal when the automaker’s inventory fell under the $1 per share threshold (for 30 days) required for itemizing within the Nasdaq.
Foxconn is pivoting to creating its personal EVs, albeit doubtless for different markets, and has different deliberate makes use of for the Ohio manufacturing unit. It has contract-manufacturing agreements with different automotive startups, together with IndiEV and Fisker.
