Lordstown Motors announced it has filed for bankruptcy, as the company will be undergoing a strategic restructuring process to maximize the value of its assets, its on-the-road Endurance all-electric (EV) pickup truck, and the intellectual property, platform, and people that developed it.
As part of the process, Lordstown filed litigation against global technology company Hon Hai Technology Group and certain of its affiliates, including Foxconn Ventures Pte. Ltd. (Foxconn), in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court).
The litigation details Foxconn's fraud and willful and consistent failure to live up to its commercial and financial commitments to the company. Foxconn's actions led to material damage to the company as well as its future prospects, according to Lordstown Motors' news release.
"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," said Edward Hightower, CEO/president of Lordstown. "Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute 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."
Lordstown Suing Foxconn
The complaint filed against Foxconn centers on a strategic partnership Lordstown's management team entered into with Foxconn to combine Lordstown's innovation, technology, vehicle engineering team, and manufacturing facility in Lordstown, Ohio with Foxconn's resources, supply chain capabilities, and position as an electronics manufacturers with stated significant automotive capabilities to form a new, scalable joint vehicle development platform.
Under the partnership, Lordstown agreed to divest its most valuable assets to Foxconn, namely its Lordstown, Ohio manufacturing facility along with its manufacturing and operational employees.
The up-front purchase price for the Lordstown manufacturing facility reflected the expected benefits of the contractual assurances from Foxconn that Foxconn would support the Endurance pickup truck in a variety of ways and follow through on a joint vehicle development program, leveraging what was purported to be Foxconn's EV ecosystem and meeting its commitments to the Lordstown community.
The lawsuit details the fact that Foxconn had no intention of living up to its commitments, particularly with respect to the new vehicle development platform.
As the lawsuit describes, Foxconn used its variety of contractual arrangements with the company as a tool to maliciously and in bad faith destroy Lordstown's business—while leveraging resources gained through the partnership to advance its own business interests.
Originally posted on Automotive Fleet