Lordstown Motors Faces Financial Struggles as Partnership with Foxconn Sours
Lordstown Motors, an electric vehicle (EV) startup, is facing financial difficulties as its partnership with Foxconn Technology Group, the world’s largest contract manufacturer for electronics, has turned sour. In 2022, Foxconn agreed to purchase a former General Motors factory in Lordstown, Ohio, for $230m, where it planned to manufacture Lordstown’s debut EV, the Endurance electric pickup truck. The partnership between the two companies also involved Foxconn investing up to $170m in Lordstown and taking two seats on the company’s board. However, Foxconn has allegedly refused to pay the remaining $117.3m, claiming that Lordstown has breached their agreement by receiving a delisting notice from the NASDAQ stock exchange after its stock price dropped below the $1.00 minimum requirement for 30 consecutive trading days. Lordstown denies the allegations and is currently in discussions with Foxconn to seek a resolution.
The situation has escalated to the point where Lordstown has warned that it may have to file for bankruptcy if it cannot secure funding from other sources. The company is evaluating its legal and financial options in the event that a deal with Foxconn is not made. The potential unraveling of the partnership comes less than a year after Foxconn agreed to invest up to $170m in Lordstown. In November 2022, Foxconn purchased approximately $22.7m of Lordstown’s Class A common stock and $30m of preferred stock.
Lordstown’s statement on the matter reads, “Foxconn’s actions are completely unwarranted. Their course of conduct has resulted in material – and what is becoming irreparable – harm to the company. We intend to continue our efforts to minimize the damage and work with Foxconn to find an amicable path forward. However, in the absence of a timely resolution, we will take all actions necessary to protect our business interests and enforce all of our rights and remedies.”substantial doubt regarding our ability to continue as a going concern.”substantial doubt regarding our ability to continue as a going concern.
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