If a difficult road to production and an electric pickup truck with shockingly low range wasn’t enough to deal with, Lordstown Motors is gearing up for a legal battle with Taiwanese company Foxconn.
According to a regulatory filing on Friday, Lordstown has stated its intention to sue Foxconn if the latter reneges on their investment agreement and fails to acquire approximately 10% of Lordstown’s shares. In the filing Lordstown says Foxconn has acted in bad faith and they believe the company is unlikely to follow through on the deal. (via Bloomberg)
The threat of litigation is a marked change from where the two companies were just two years ago. In 2021 it looked like Lordstown was on their way to bankruptcy before Foxconn stepped up and Foxconn agreed to purchase the struggling automaker’s 6.2-million-square-foot factory in Ohio and produce their own EVs there. Along with a $230 million payment for the facility, Foxconn also agreed to acquiring about 10% of Lordstown’s common stock for $47.3 million.
However, the relationship between the two companies began to deteriorate earlier this year when Lordstown’s stock price fell below $1, leading to a warning from the Nasdaq about a potential delisting. Following the warning Foxconn sent a letter to Lordstown claiming the automaker had breached the agreement and warned it would terminate the investment agreement if the breach was not resolved within 30 days.
Lordstown issued a warning to investors last month that it could be forced to declare bankruptcy as Foxconn threatened to withdraw from the critical funding deal.
This turn of events comes at a time when Lordstown is desperately trying to stay afloat. The company has already revealed it is likely to halt production of its Endurance pickup truck due to ongoing production delays, being unable to find a strategic partner for the truck, and a lack of ability to raise funds.
