Lordstown Motors shares fell after a dispute with investor Foxconn

New York (CNN) Shares of electric truck maker Lordstown Motors fell more than 40% in Monday trading and ended the day down 23%, after the company disclosed that Foxconn, a lead investor and company that helps build its trucks, said it wanted to step back. to make more investments.

With that arrangement apparently unraveling, Lordstown could face bankruptcy, according to the truck maker.

Foxconn, formally called the Hon Hai Technology Group, is best known for making Apple’s iPhones, but has recently been making moves toward building electric cars. In 2021, it bought a factory in Ohio that Lordstown Motors itself had bought from General Motors in 2019. Foxconn also agreed to handle the manufacture of the Lordstown electric truck on site and make further investments pending some milestones.

According to papers Lordstown Motors filed with the Securities and Exchange Commission on Monday, Foxconn alleged that Lordstown did not meet agreed requirements and, therefore, Foxconn refuses to pursue agreed future investments.

In April, Lordstown Motors received a letter from Nasdaq notifying the company that due to a drop in its share price, the company was at risk of being delisted. Because of this letter, according to Wordstown, Foxconn claimed that the company had not adhered to investment agreements.

Lordstown refutes Foxconn’s allegations, but if those investments do not materialize, “the company will be denied funding necessary for its operations,” according to a Lordstown Securities Commission filing.

“Foxconn’s actions are completely unjustified,” Lordstown said in a statement. “Their behavior has resulted in material harm to the Company – and what has become irreparable –. We intend to continue our efforts to minimize the harm and work with Foxconn to find an amicable way forward. However, in the absence of a timely resolution, we will take all actions necessary to protect our business interests and enforce all of our rights and remedies.”

In a statement Monday, Foxconn said: “We understand that Lordstown Motors is currently evaluating different courses of action as it relates to its Nasdaq listing status. In the meantime, we remain open to continuing our discussion and working together to reach a mutually acceptable outcome that benefits stakeholders.” we’ve got “.

Lordstown stock was trading at about 30 cents a share Monday afternoon.

This isn’t the first time Lordstown has warned it could go out of business. In June 2021, she warned that she did not have enough money to last through the next two years without further investment. That same month she also clarified that she didn’t actually have binding orders at that time for her truck.

The company, based in Ohio, from which it takes its name, It has long planned to manufacture electric pickup trucks marketed strictly to the commercial fleet market, not to consumers. Ford already produces an electric pickup, the F-150 Lightning, which is sold to both fleet and retail customers, and GM will enter the market with electric trucks from its Chevrolet and GMC brands next year.

Late last year, the company announced that it was ready to deliver its first pickups from Lordstown, which were produced with help from Foxconn.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top