Lordstown Motors to Sue Foxconn Over Stalled Investment
[Stay on top of transportation news: Get TTNews in your inbox.]
Lordstown Motors Corp. intends to sue backer Foxconn Technology Group as the companies remain at odds over a stalled investment in the EV startup.
Foxconn, best known for assembling iPhones for Apple Inc., remains “unlikely” to follow through on that investment, the Ohio company said in a filing with the U.S. Securities and Exchange Commission on June 9. Lordstown accused Foxconn of operating in “bad faith” and said that, without a “prompt resolution,” it “intends to enforce its rights through litigation.” A representative for Foxconn did not immediately respond to a request for comment.
Lordstown revealed on May 1 that Foxconn was holding back on a $47 million investment because Lordstown’s stock had fallen below $1, which put the company in violation of Nasdaq’s listing rules. Lordstown claimed this was a breach of the investment agreement the companies signed late last year, which was supposed to see as much as $170 million invested in the startup.
The company warned it may have to seek bankruptcy protection without Foxconn’s funding.
Lordstown implemented a reverse stock split in May that lifted its share price back above $1, putting it back in compliance with Nasdaq. Foxconn told the startup on June 5 that if it does follow through with the investment, it wants to buy shares at the post-split price, which would give the Taiwanese giant majority ownership of the startup, according to a letter attached to the June 9 filing.
In 2022, Foxconn purchased a former General Motors Co. factory in Lordstown, Ohio, for $230 million from Lordstown Motors, and agreed to build its electric pickup truck. Lordstown Motors has struggled, though, to get the cost of building the truck below the $65,000 sticker price, and said earlier this year that it needs help from a larger automaker to accomplish that goal.
Want more news? Listen to today's daily briefing below or go here for more info:
