Lordstown Motors, an electric carmaker founded on the site of an abandoned General Motors plant in Ohio in 2018, declared bankruptcy yesterday (June 27). The announcement came after a joint venture with Apple supplier Foxconn to mass-produce an electric truck fell apart. Lordstown had been in an on-again, off-again deal with Foxconn for nearly two years and it showed signs of demise as early as last year, Lordstown CEO Edward Hightower said in an interview with Bloomberg published today.
Last summer, Hightower flew to Taiwan, where Foxconn is headquartered, to meet with leaders of Foxconn’s EV subsidiary, Foxtron. The meeting was to discuss a partnership to develop a new electric vehicle. But the CEO of Foxtron refused to meet with Hightower, the Lordstown CEO told Bloomberg.
Hightower did get some face time with Young Liu, Foxconn’s chairman. But because no one from Foxtron showed up, he wasn’t able to obtain the engineering drawings, data and essential licensing agreements needed to get the EV project started. Hightower spent three days in Covid-19 quarantine and then waited around for almost two weeks in Taiwan. In the end, he gave up and flew back to Detroit.
“I made the trip to Taiwan to break the logjam,” Hightower told Bloomberg. “A lot of times it is about relationships…I was not able to meet my objective.”
In parallel to its Chapter 11 bankruptcy filing, Lordstown yesterday also sued Foxconn, alleging breach of contract and fraud.
An ill-fated deal that never materialized
Foxconn, best known for assembling the world’s largest share of iPhones and other Apple products, has the ambition to enter the U.S. electric vehicle market. In late 2021, Foxconn struck a deal with Lordstown to buy its only factory in northeast Ohio and lend its engineering expertise to build the startup’s first electric pickup truck, the Endurance.
The deal was later modified with Foxconn promising to invest up to $170 million in exchange for 18 percent of Lordstown. So far, Foxconn has invested about $52.7 million and owns 8.4 percent of Lordstown.
Lordstown claims Foxconn is balking at buying additional shares as promised and never made the promised payments toward the development of electric vehicles. “Foxconn had no intent of doing anything to achieve these initiatives; they were just promises designed to string the company along so that Foxconn could starve it out of existence,” Lordstown said in a complaint to the Delaware Bankruptcy Court yesterday.
In a statement yesterday, Foxconn called Lordstown’s legal action “baseless” and accused the company of attempting to “mislead the public.”
Lordstown is currently seeking a buyer with no obvious bidders in sight. Hightower told Reuters yesterday the company’s Endurance pickup truck could be attractive to another automaker looking for a fast entry into the U.S. EV market.
Hightower, a former executive at GM and Ford, joined Lordstown in late 2021 to lead the company’s turnaround. Its previous CEO and founder Steve Burns resigned in June 2021 amid allegations of financial fraud and had sold all of his Lordstown stakes for $66 million before it collapsed.
