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Lordstown Motors files for bankruptcy, sues Foxconn

Lordstown Motors (RIDE) filed for Chapter 11 bankruptcy and put its assets up for sale while subsequently suing chipmaker Foxconn over an investment dispute on Tuesday.

The Delaware bankruptcy filing sent shares tumbling nearly 60% in pre-market trading.

Lordstown, an electric vehicle startup founded in 2018, went public via SPAC in October 2020 and peaked at $435 per share amid the pandemic EV boom. At one point, Lordstown had a market value of more than $5 billion.

Former President Donald Trump played a role in the stock's rise, as shares soared on the day Trump viewed a 2021 Lordstown Motors 2021 endurance truck.

"We've been working on this very long and very hard," President Trump said on September 28, according to Fox News. "They went in and they have an incredible vehicle."

 

Shares had precipitously declined as investor focus shifted to profitability. In the most recent quarter, Lordstown posted net sales of $189,000.

Lordstown still has parts that might interest a buyer including a plant in Lordstown, Ohio. Lordstown also recently resumed the production and deliveries of its Endurance pickup truck in April. The company paused those processes in February to address quality issues.

The company noted in a press release that the Endurance is a certified, production-launched vehicle and could "serve as a springboard" for an original equipment manufacturer.

In its lawsuit, Lordstown argued Foxconn didn't fulfill the terms of an agreement that included a stalled $47 million investment.

"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," Lordstown CEO and President Edward Hightower said in a statement. "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."

A mural is displayed on the wall outside the Lordstown Motors plant, June 22, 2021 in Lordstown, Ohio. Lordstown Motors Corp. says it is in danger of failing because Foxconn is looking to back away from an agreement to invest up to $170 million in the commercial electric vehicle startup. Lordstown said in a regulatory filing on Monday, May 1, 2023 that it received a letter from Foxconn Ventures on April 21 saying that the company was in breach of the investment agreement because it had received a delisting warning from the Nasdaq stock market. (AP Photo/David Dermer, file)
A mural is displayed on the wall outside the Lordstown Motors plant, June 22, 2021, in Lordstown, Ohio. (AP Photo/David Dermer, file) (ASSOCIATED PRESS)

Josh Schafer is a reporter for Yahoo Finance. Follow him on Twitter @_JoshSchafer

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