Electric vehicle brand Lordstown Motors is suing its former business partner Foxconn after filing for bankruptcy on June 27.
The conflict stems from a deal struck by the two companies last year, which saw the Taiwanese tech conglomerate commit to buying $100 million worth of the EV manufacturer’s shares; $52.7 million due upfront and the remaining $47.3 million due after the Committee on Foreign Investment in the United States (CFIUS) certified the agreement. In May, Foxconn accused Lordstown Motors of breaching its contract by failing to keep shares above the $1 minimum required to stay on the Nasdaq and refused to complete its purchase. In response, the automaker argued that the final payment was owed “in any event” after the CFIUS approved the deal, which it had done the month before.
The EV company now claims that Foxconn “had no intention of living up to its commitments” and is accusing the company of “fraud and willful and consistent failure to live up to its commercial and financial commitments.” According to Lordstown Motors CEO Edward Hightower, bankruptcy was “the only viable option…” after the deal fell through.
The tech giant has meanwhile denied any wrongdoing and instead accused Lordstown Motors of attempting to “mislead the public” and being “reluctant to perform the investment agreement between the two parties in accordance with its terms.”
Although the future of the Lordstown Motors brand remains uncertain, it is important to remember that its struggles are far from unique. Of all the EV startups to come from the U.S., only Tesla has found success. Newcomers, such as Lucid and Rivian, have all found it exceedingly difficult to gain a foothold in today’s car market.
