CNN
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Lordstown Motors filed for chapter safety Tuesday, put itself up on the market, and introduced a lawsuit towards Foxconn, accusing its largest shareholder and former accomplice of getting down to “destroy” its enterprise.
The electrical automobile maker, which makes a speciality of pick-up vehicles, made a Chapter 11 submitting in a Delaware courtroom whereas concurrently beginning authorized motion towards Foxconn.
In a statement, the corporate mentioned it was left with no alternative after a high-profile tie-up with Foxconn, one of many world’s largest electronics producers, fell aside. It accused the Taiwanese tech agency of fraud and failing to comply with via on guarantees to spend money on the corporate.
“Regardless of our greatest efforts and earnest dedication to the partnership, Foxconn willfully and repeatedly did not execute on the agreed-upon technique, leaving us with Chapter 11 as the one viable possibility,” Lordstown CEO Edward Hightower mentioned within the assertion. “We are going to vigorously pursue our litigation claims towards Foxconn accordingly.”
In a press release to CNN, Foxconn dismissed the swimsuit as meritless, saying Lordstown had made “false feedback and malicious assaults.” Foxconn mentioned it had been making an attempt to have “constructive negotiations” with Lordstown to assist “to find an answer to its monetary difficulties.”
“Nonetheless, throughout this time, [Lordstown] has repeatedly tried to mislead the general public and has been reluctant to carry out the funding settlement between the 2 events,” it mentioned, with out specifying how.
“Foxconn initially hoped to proceed discussions and attain an answer that might fulfill all stakeholders, with out resorting to baseless authorized actions, however to this point the 2 events have but to achieve a consensus,” it mentioned, including it reserved the best to pursue its personal authorized motion.
Foxconn shares in Taipei closed down 1.3% Tuesday. Lordstown’s shares tanked 61% in premarket buying and selling, including to an almost 84% plunge in its inventory worth to this point this 12 months.
Formally known as Hon Hai Know-how Group, Foxconn is finest recognized for making iPhones for Apple
(AAPL), however has not too long ago made strikes towards constructing electrical autos. In 2021, it bought an Ohio manufacturing facility that Lordstown Motors had itself purchased from Common Motors in 2019.
Foxconn additionally agreed to deal with the manufacturing of Lordstown’s Endurance electrical pick-ups on the web site, and to make additional investments offered sure milestones had been met.
However the partnership appeared to interrupt down earlier this 12 months. In Could, Lordstown disclosed that Foxconn mentioned it needed to again out of constructing additional investments over claims that the automaker had not upheld its finish of the settlement.
That deadlock left the already struggling automaker on even shakier monetary floor. Lordstown warned final month that it might face chapter.
Dustin Franz/Bloomberg/Getty Pictures
Lordstown Motors headquarters seen in Lordstown, Ohio in 2021.
Now, the corporate is searching for a purchaser. In its assertion Tuesday, the corporate mentioned one other automaker may benefit from its experience, saying its flagship truck might “function a springboard” for the best producer “at a fraction of the fee and time it might take to develop a program from the ground-up.”
A purchaser might additionally use the startup’s automobile growth platform to create different forms of electrical vehicles, it added.
Lordstown takes its identify from the commercial Ohio city the place it’s primarily based. The manufacturing facility it purchased from GM in 2019 used to provide small vehicles for America’s top automaker, and was thought of the lifeblood of the local economy as an employer of greater than 1,600.
As of December, Lordstown Motors had only a fraction of that headcount, with 260 full-time workers, in keeping with its newest annual report. However its debut revived some optimism about job alternatives at a dark time for the group.
Nonetheless, Lordstown has lengthy been dogged by monetary challenges. In 2021, just some years after launching, it warned that it might exit of enterprise, citing money circulation points that had been stopping it from beginning industrial manufacturing.
Since then, the corporate has delivered simply 18 vehicles to clients, and constructed 56 autos since starting industrial manufacturing, in keeping with a regulatory filing final month.
The corporate’s pick-up truck caters to enterprise customers. One benefit of the Endurance is that it incorporates fewer transferring elements than different conventional industrial autos, resulting in decrease upkeep prices, in keeping with the startup.
However Lordstown has confronted stiff competitors from different bigger gamers that have unveiled their very own electrical pick-ups lately, comparable to Ford
(F), which sells to each fleet and retail clients.
Foxconn is Lordstown’s largest shareholder, with a stake of about 8.4%.
However wanting to make a splash within the auto world, the Taiwanese agency has brokered preparations with different electrical carmakers lately. It’s teamed up with Fisker, a California startup, to construct a small, reasonably priced automobile known as the Pear on the Lordstown manufacturing facility.
One other California-based startup, Indi EV, has additionally agreed to have Foxconn construct its automobile, the Indi One, there.
The campus is billed as one of many largest automobile vegetation in North America, with a manufacturing capability of 400,000 autos a 12 months.
