Lordstown Motors Finally Sputters into Bankruptcy

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Electric vehicle startup-turned-SPAC-star Lordstown Motors is officially out of juice.

On Tuesday, the EV truck-maker, which parked itself in the national spotlight by setting up shop in a closed General Motors factory in Rustbelt, USA, filed for bankruptcy amid an ongoing legal fight with investment partner Foxconn.

Foxconn Job 2: Electric Boogaloo

Lordstown is either a textbook case of corporate hubris in the low-interest rate era or a victim of Murphy’s Law. Or was it brought down, as the company maintains, by fraud perpetrated by Taiwanese electronics manufacturing giant Foxconn, which now has a bit of a track record of over-promising and under-delivering in small American towns? Let’s back up and start at the beginning.

In November 2019, Lordstown Motors, still more of a concept than a functioning company, agreed to buy a shuttering 6-million-square-foot plant from GM in Lordstown, Ohio for $20 million (mostly financed via GM loans). In October 2020, the company went public via a SPAC merger at a $1.6 billion valuation, raising $675 million in the process, or, per founder/CEO Steve Burns, “more than enough funding to get us through initial production” of the 100,000 truck preorders it claimed to already have. That was enough to rocket its market cap all the way up to $5 billion in February 2021. Then came a hype-busting Hindenburg Research report in March 2021, and the ultimate resignation of Burns and his CFO.

All the while, the company never kicked production into gear. A prototype infamously went up in flames. By September 2021, the company sold the plant to Foxconn for $230 million and another $50 million worth of shares, contracting manufacturing to Foxconn in the process. But what once looked like a lifeline turned out to be fool’s gold:

  • Foxconn couldn’t figure manufacturing out either, building just 31 trucks in 2022, and delivering just three in this year’s first quarter, with Lordstown reporting $189,000 in revenue along with $171 million in losses. Ouch.
  • In November 2022, Foxconn agreed to a $170 million investment in Lordstown via rounds of share purchases to occur across several months. But when a second round of scheduled share purchases, worth nearly $50 million, came in April, Foxconn balked — claiming Lordstown violated the investment agreement when its share price fell below $1, down from over $400 at its market debut.

Filing Cabinet: In addition to filing for bankruptcy on Tuesday, Lordstown said it is also filing a lawsuit against Foxconn, alleging the manufacturer’s moves “had the intended effect of destroying the business of an American start-up.”

No Contest: If it’s any consolation to Lordstown, it’s tough all over for EV makers. In China, the number of EV manufacturers has plummeted to around just 100 from 500 in 2019, with that number expected to shrink further, according to a Bloomberg report earlier this week. Lordstown’s woes almost mirror that of similar startups in the domestic market, like Rivian, Nikola, and Lucid. It’s no wonder Elon Musk once called car factories “gigantic money furnaces.”