Lordstown Motors files for bankruptcy protection and sues Foxconn

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Electric vehicle maker Lordstown Motors on Tuesday filed for bankruptcy protection and said it’s suing former partner Foxconn.

Lordstown said it’s filing for Chapter 11 bankruptcy protection as it accused Foxconn of fraud, bad faith and contract breaches.

Lordstown shares
fell 57% in premarket trade, after ending Monday at $2.76, down 7%. Lordstown shares have slumped 90% from its 52-week high.

Lordstown lost $171 million in the first quarter on virtually no revenue. While it started commercial production of the Endurance pickup truck last year, it paused production due to performance and quality issues. Foxconn said Lordstown violated an investment agreement and would not go through with a plan to buy an additional $47 million of Lordstown stock.

“Under the partnership, Lordstown agreed to divest its most valuable assets to Foxconn, namely its Lordstown, Ohio manufacturing facility, which is one of the largest in North America, along with its highly talented and experienced manufacturing and operational employees. The up-front purchase price for the Lordstown manufacturing facility reflected the expected benefits of the contractual assurances from Foxconn that Foxconn would support the Endurance pickup truck in a variety of ways and follow through on a joint vehicle development program, leveraging what was purported to be Foxconn’s established and extensive EV ecosystem and meeting its commitments to the Lordstown community,” said the company.

“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,” the company said.

Apple supplier Foxconn, whose formal name is Hon Hai Precision Industry Co. 
slipped 1% in Taipei.

“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,” said Foxconn in response.

“Regarding [Lordstown Motors Corp] litigation announcement today and the false comments and malicious attacks made by LMC in its external statements against Foxconn, the Company reserves the right to pursue legal actions and also suspends subsequent good faith negotiations.”

Lordstown said it will use the Chapter 11 protection to maximize the value of its assets, including the Endurance truck and associated intellectual property.

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