NEW YORK: Lordstown Motors, an electric vehicle startup based in the US state of Ohio, said Tuesday it has filed for bankruptcy protection and is suing Foxconn after a protracted dispute with the Taiwanese electronics giant. Specializing in light-duty all-electric pickups, Lordstown said it had filed litigation against Foxconn for “fraud and willful and consistent failure to live up to its commercial and financial commitments to the Company.” “Foxconn’s actions led to material damage to the Company as well as its future prospects,” with Lordstown filing for Chapter 11 bankruptcy protection as a result, the statement added.
A main supplier for Apple’s iPhone, Foxconn has turned to EV production as part of its diversification and plans to make auto assembly a key part of its future growth. In May 2022, it acquired Lordstown’s vehicle assembly plant in the midwestern state of Ohio and signed a contract manufacturing agreement to build Lordstown’s flagship vehicle, the Endurance pickup.
Under the agreement, “Lordstown agreed to divest its most valuable assets to Foxconn,” the US company founded in 2018 argued, and expected “contractual assurances” that Foxconn would support the continued development and production of the Endurance. But “Foxconn had no intention of living up to its commitments” to establish a development platform for new vehicles, the lawsuit states according to Lordstown, which said such breaches caused “material and irreparable harm” to the automaker.
Lordstown had indicated in early June it planned to sue Foxconn to force it to take a stake in the production operation, as it had initially undertaken to do before backtracking. Foxconn’s parent company, Hon Hai Technology Group, said in a statement that it had maintained a “positive attitude” during negotiations with Lordstown but said the US firm’s statement Tuesday amounted to “malicious attacks” against the Taiwanese company.
Lordstown “has been reluctant to perform the investment agreement between the two parties in accordance with its terms,” it added. “Foxconn originally hoped to continue discussions and reach a solution that could satisfy all stakeholders, without resorting to baseless legal actions, but so far the two parties have yet to reach a consensus.” In pre-market trading before the opening of the New York Stock Exchange, Lordstown’s share price plunged by about 60 percent, to $1.11. It was trading above $375 at the start of 2021. — AFP