Embattled EV maker Lordstown Motors Corp. announced that the company is filing for Chapter 11 bankruptcy protection and filing a lawsuit against Hon Hai Technology Group, parent company of Foxconn.
Lordstown Motors accused the Taiwanese electronics manufacturer Foxconn of reneging on promised investments in the EV maker, causing “material and irreparable harm.”
In November 2021, Lordstown Motors announced that Foxconn had agreed to purchase the bulk of the assets of its Lordstown, Ohio, manufacturing plant for $230 million. After that deal closed in May 2022, Lordstown announced that Foxconn would invest $170 million in the company, which Lordstown planned to use for a new EV program.
“The litigation details Foxconn’s fraud and willful and consistent failure to live up to its commercial and financial commitments to the company,” Lordstown Motors asserted in a news release. “Foxconn’s actions led to material damage to the company as well as its future prospects.”
The EV maker said it launching “a comprehensive marketing and sale process for the Endurance vehicle and related assets.” Restructuring under Chapter 11 of the U.S. Bankruptcy Code will help Lordstown Motors “accomplish this expeditiously and provide a prospective buyer with a going-concern asset that is free and clear of any legacy issues,” the company said.
“As one of the early entrants to the EV industry, we have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential – and had subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform,” said Edward Hightower, CEO and president of Lordstown Motors. “Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.”
Lordstown Motors said the litigation against Foxconn “centers on a transformative, strategic partnership” between the two companies pairing “Lordstown’s innovation, technology, accomplished vehicle-engineering team and manufacturing facility in Lordstown, Ohio, with Foxconn’s resources, supply chain capabilities and position as one of the world’s largest electronics manufacturers with stated significant automotive capabilities to form a new, scalable joint vehicle development platform.”
“The lawsuit details the fact that Foxconn had no intention of living up to its commitments, particularly with respect to the new-vehicle development platform,” Lordstown Motors said in a news release. “As the lawsuit describes, Foxconn simply used its variety of contractual arrangements with the company as a tool to maliciously and in bad faith destroy Lordstown’s business –while leveraging resources gained through the partnership to advance its own business interests.”
