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Electric Truck Maker Lordstown Motors Files For Bankruptcy

Troubled U.S. electric truck manufacturer Lordstown Motors filed for bankruptcy on Tuesday and simultaneously sued Taiwan-based Foxconn for fraud and failure to follow through on its commitment to invest $170 million in the company.  

Lordstown Motors was one of many EV startups to go public during the boom of the Special Purpose Acquisition Companies (SPACs), but has struggled financially for years.

Two years ago, Lordstown Motors warned it might have to shut down for business as funds were running low.

Last November, the EV truck manufacturer signed a deal with Hon Hai Technology Group, as Foxconn is officially named, under which the world’s biggest contract manufacturer for electronics would invest up to $170 million to buy shares in Lordstown Motors. The funding was expected to be used for ramping up Lordstown Motors’ debut EV truck model, the Endurance.

“Over the last year, the LMC and Foxconn teams have worked collaboratively to bring the Endurance into commercial production, despite numerous external challenges. We acknowledge and appreciate the confidence in our team that is shown by this investment,” Lordstown CEO and President Edward Hightower said at the time.

Last month, however, Lordstown Motors warned that it cannot predict whether an ongoing dispute with Foxconn over the planned investment could be solved.

“In light of the Foxconn dispute and the uncertainty regarding whether or to what extent Foxconn will fulfill its funding obligations under the Investment Agreement, the Company has taken aggressive actions to reduce costs and preserve liquidity,” Lordstown said in May.

Today, the EV truck maker – apart from filing for Chapter 11 – sued Foxconn for “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,” Lordstown Motors said on Tuesday.

“Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on 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,” Lordstown’s Hightower said.

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By Tsvetana Paraskova for Oilprice.com

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