Lordstown Motors Corp. has launched an electric vehicle (EV), based in Ohio. announced It is filing for Chapter 11 bankruptcy after significant financial distress, and a legal dispute with its former investment partner Foxconn.
This news is a surprise to the industry as Lordstown Motors, a company that was once hailed for its electric vehicle technology, has now been shut down. The company has a reputation for producing high-quality electric vehicles. EnduranceIts electric pickup truck.
Lordstown attributes its financial problems to Foxconn. The electronics manufacturer is best known for manufacturing Apple’s iPhone. The automaker is suing Foxconn over fraud and failure to honor investment commitments. This has caused significant harm to their business.
Foxconn made a $170-million investment in Lordstown. That deal now seems to be the crux of the conflict. Taiwanese electronic company claimed that Lordstown violated their investment agreement. Lordstown strongly denies these allegations.
Lordstown’s stock price has plummeted by over 35% following the bankruptcy announcement. The decline of share price Lordstown had been at risk before of being delisted by the Nasdaq.
Lordstown, despite these setbacks plans to undergo an extensive restructuring process. This will include the auctioning of its intellectual property and assets, specifically, the rights to the Endurance Electric Vehicle platform.
Lordstown’s bankruptcy is a good example of the volatile nature of the EV startups. Due to the success of established carmakers such as Tesla, new entrants have faced many challenges.
This financial obstacle is a major setback for Lordstown Motors. It was once hailed by many as a symbol of EV resurgence in the Rust Belt. Edward Hightower maintains, however, that Lordstown Motors was forced to declare bankruptcy because Foxconn allegedly failed to follow through on the agreed investment strategy.
This situation brings to light the fact, that in order to compete in the EV industry you need more than just promising prototypes and production plants. The EV market is expected to grow exponentially in the next decade. Industry watchers are interested to see how Lordstown performs.