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Jun 27, 2023 - Economy

Lordstown Motors files for Chapter 11 bankruptcy and sues Foxconn

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The Lordstown Motors plant in Lordstown, Ohio, a former GM property now owned by Foxconn, which invested in Lordstown and agreed to make the company's Endurance pickup. Photo: Dustin Franz/Bloomberg via Getty Images

Lordstown Motors, a startup electric vehicle company once heralded as the savior of a former General Motors plant in Ohio, filed for bankruptcy protection on Tuesday and sued its partner Foxconn.

Why it matters: The filing marks the collapse of a company that had ambitions of becoming a major player in the EV industry but ended up making only a handful of pickups before its implosion.

  • It also marks a bitter outcome to the once-hopeful relationship between Lordstown and Foxconn, which had invested in the EV company and took over production at its plant in Lordstown, Ohio.

Driving the news: Lordstown said it will attempt to sell its assets, including its Endurance EV pickup, through bankruptcy.

  • And the company sued Foxconn, alleging fraud and saying its Taiwanese partner "had no intention of living up to its commitments" to help develop a new vehicle platform and instead looked "to advance its own business interests."
  • Foxconn last month threatened to pull out of its deal to fund Lordstown's production when the Nasdaq said it might delist the EV company's stock from its exchange.
  • The threat caused Lordstown to warn that its future was in jeopardy.

The other side: Foxconn said in a statement Tuesday morning that it had maintained "a positive attitude in conducting constructive negotiations with Lordstown" and was trying to find a "solution to its financial difficulties."

  • "However, during this time, LMC has continuously attempted to mislead the public and has been reluctant to perform the investment agreement between the two parties in accordance with its terms," Foxconn said, adding that Lordstown's allegations are "false" and "malicious."

The intrigue: When Foxconn invested in Lordstown and reached a manufacturing partnership with the company, it was viewed as a landmark step in the iPhone maker's ambitions of becoming a serious player in the EV world.

  • As part of the deal, Foxconn acquired the former GM plant, which narrowly escaped permanent closure during the financial crisis and then was idled a decade later when GM stopped making the Chevrolet Cruze.

What to watch for: What Foxconn does with the Lordstown plant, and whether Lordstown's litigation is successful.

This story has been updated to include the comment from Foxconn.

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