US electric vehicle start-up Lordstown Motors files for bankruptcy protection

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Lordstown Motors has filed for bankruptcy protection, marking the end of the road for a troubled electric truck maker that promised hundreds of jobs in a corner of the US Rust Belt tied to the auto industry’s green transition.

The company said the move comes after settling a deal with Taiwan’s Foxconn, which agreed to partner with Lordstown in 2021 and help produce its flagship pick-up truck, the Endurance, and last year Bought its plant.

In a statement on Tuesday, Lordstown accused Foxconn of failing to “execute the agreed strategy, leaving Chapter 11 with us as the only viable option to maximize the value of Lordstown’s assets for the benefit of our stakeholders.” left”.

Launched in 2019 and operating out of a former General Motors plant in northeastern Ohio, Lordstown is the most high-profile casualty among the wave of electric vehicle makers founded over the past decade.

Despite raising millions of dollars when interest rates were low, most are now struggling to build at scale – Lordstown has only sold a small number of Endurances. Electric vehicles represent the biggest change in auto manufacturing since Henry Ford’s assembly lines cut 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 meeting its commitments”.

Foxconn did not immediately respond to a request for comment.

As part of the 2021 deal, Foxconn agreed to buy the Lordstown plant for $230 million. Prior to the Lordstown acquisition, the plant was owned by GM, but the American carmaker ended production there in 2019.

Lordstown, founded by the chief executive of financially vulnerable EV start-up Workhorse Group, emerged as a potential white knight. It bought the plant from GM and said it planned to employ 400 workers to produce the Endurance, which it marketed to commercial customers.

Then-President Donald Trump told residents of the politically important state that the region’s blue-collar jobs were “coming back” after decades of deindustrialization.

Lordstown raised $675 million after going public through a special purpose acquisition vehicle organized by a former Goldman Sachs real estate banker, although its auditors questioned whether it “can continue as a going concern”.

Trump invited then-Chief Executive Steve Burns to the White House in the autumn of 2020 and promoted a prototype of the Endurance, calling it “great technology”.

But Lordstown Motors suffered a setback 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 means to raise capital”. “. Both the US Attorney for the Southern District of New York and the Securities and Exchange Commission launched investigations of the company, which are ongoing. The company has said it is cooperating.

In June 2021, the company said it lacked the money to start commercial production and could fail within a year. But four months later it announced the Foxconn deal. Foxconn, best known as the contract manufacturer for Apple’s iPhone, said in November it would invest up to $170 million in Lordstown.

Lordstown’s stock, which started 2020 on the Nasdaq at $18.97, closed Monday at $2.77.