Receive free Lordstown Motors updates
We’ll send you a myFT Daily Digest email rounding up the latest Lordstown Motors news every morning.
Lordstown Motors has filed for bankruptcy protection, marking the end of the road for a troubled electric truck manufacturer that promised a corner of the US Rust Belt hundreds of jobs tied to the auto industry’s green transition.
The company said the move followed the unravelling of a deal with Taiwan’s Foxconn, which in 2021 agreed to partner with Lordstown and help produce its flagship pick-up truck, the Endurance, and last year purchased its plant.
In a statement on Tuesday, Lordstown accused Foxconn of failing to “execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximise the value of Lordstown’s assets for the benefit of our stakeholders”.
Launched in 2019 and operating out of a former General Motors plant in north-eastern Ohio, Lordstown is the highest-profile casualty among the wave of electric vehicle manufacturers established over the past decade.
Despite raising millions of dollars while interest rates were low, most are now struggling to manufacture at scale — Lordstown has sold just a small number of the Endurance. Electric vehicles represent the greatest change in auto manufacturing since Henry Ford’s assembly lines slashed production costs more than a century ago.
As part of the bankruptcy filing, Lordstown said it had launched legal action against Foxconn, alleging that the group had “no intention of living up to its commitments”.
Foxconn did not immediately respond to a request for comment.
As part of the 2021 deal, Foxconn agreed to buy Lordstown’s plant for $230mn. Before Lordstown took it over, the plant was owned by GM but the US carmaker ended production there in 2019.
Lordstown, founded by the chief executive of the financially shaky EV start-up Workhorse Group, emerged as a potential white knight. It bought the plant from GM and said it planned to hire 400 workers to produce the Endurance, which it marketed to commercial customers.
Then-president Donald Trump had told residents of politically important states that the area’s blue-collar jobs were “coming back” after decades of deindustrialisation.
Lordstown raised $675mn after going public via a special purpose acquisition vehicle orchestrated by a former Goldman Sachs real estate banker, even though its auditor questioned whether it could “continue as a going concern”.
Trump invited then-chief executive Steve Burns to the White House in the autumn of 2020 and touted a prototype of the Endurance, calling it “great technology”.
But Lordstown Motors suffered a hit in 2021 when high-profile short seller Hindenburg Research published a report saying the company’s 100,000 pre-orders were “largely fictitious and used as a prop to raise capital”. Both the US attorney of the southern district of New York and the Securities and Exchange Commission opened investigations into the company, which are continuing. The company has said it is co-operating.
In June 2021, the company said it lacked the money to start commercial production and might fail within a year. But four months later it announced the Foxconn deal. Best known as a contract manufacturer for Apple’s iPhone, Foxconn said in November it would invest up to $170mn in Lordstown.
Lordstown’s stock, which debuted on the Nasdaq in 2020 at $18.97, closed on Monday at $2.77.
Read the full article here
