American electric car company files for bankruptcy

Lordstown Motors - the electric car company once invested by Foxconn - has just filed for bankruptcy and sold itself after failing to resolve an existing dispute.

Electric car company Lordstown Motors on June 27 filed for bankruptcy protection in a court in the state of Delaware. The above information caused Lordstown stock to drop 35% on Nasdaq yesterday. Since early May, Lordstown has warned of possible bankruptcy if it does not get more capital. A few days ago, they were almost out of cash.

"Lordstown's bankruptcy signals that the era of successful electric car startups is coming to an end. The names that will move forward are Tesla and the traditional car company," said Thomas Hayes, chairman of venture capital fund Great Hill. Capital said on Reuters.

Lordstown Motors CEO Stephen Burns stands next to the company's Endurance electric pickup truck. Photo: Reuters

In the application, Lordstown also accused Foxconn - Apple's longtime outsourcing partner - of fraud and failure to fulfill a series of investment promises under the agreement to pour a maximum of $ 170 million into this electric car company. This amount is equivalent to 19.3% of the shares.

Foxconn previously poured $52.7 million into Lordstown and now holds an 8.4% stake there. The automaker said that Foxconn did not buy more shares as committed and caused Lordstown to misunderstand the two sides' cooperation in product development.

Foxconn believes that Lordstown itself violated the terms of the investment agreement by letting the stock price fall below $1. The Taiwanese company insists it maintains a "positive attitude in negotiations with Lordstown", but Lordstown is reluctant to implement the deal. As a result, Foxconn has stopped negotiating and may take legal action.

Lordstown was founded in 2018. The company's main product is the Endurance electric pickup truck. This vehicle is manufactured at General Motors' old factory in Lordstown and sold to a wide range of customers, including local governments. Last year, Lordstown sold the factory to Foxconn.

Earlier this year, Lordstown stopped production of the vehicle and only partially resumed it in April, after resolving quality issues with suppliers. Lordstown filed for bankruptcy with plans to find a buyer. If it can't find a buyer willing to fully restore Endurance production, the plant could end up in the hands of foreign automakers.

On Reuters , Lordstown CEO Edward Hightower said the production of Endurance could be attractive to companies looking to move quickly into the electric vehicle market, at a time when the US government is supporting the transition from gasoline to electric cars.

Like many other competitors, including electric car maker Nikola, Lordstown has so far failed to meet the high expectations of early investors. In 2021, CEO and founder Stephen Burns resigned after the automaker admitted to exaggerating the number of product pre-orders. Their CFO then also left the company.

Lordstown also faces increasing competition. Ford Motor in 2021 launches the F-150 Lightning electric pickup truck. Another electric vehicle startup, Rivian, is also launching a luxury pickup in 2022. GM and Stellantis have all announced plans to make electric pickups. And Tesla's Cybertruck will also be produced later this year.

Ha Thu (according to Reuters, CNBC)

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