Lordstown Motors to Sue Foxconn Over Stalled Investment

EV Startup Remains at Risk of Bankruptcy Without Funding
Lordstown Motors' factory
Signage outside Lordstown Motors Corp. headquarters in Lordstown, Ohio, in 2021. (Dustin Franz/Bloomberg News)

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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.

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