Shares of electric truck maker Lordstown Motors dropped more than 40% in Monday trading and ended the day down 23%, after the company disclosed that Foxconn, its major investor and the company that is helping to build its trucks, said it wants to back out of making further investments.
With that arrangement apparently unraveling, Lordstown could face bankruptcy, according to the truck maker.
Foxconn, officially called Hon Hai Technology Group, is best known for making Apple iPhones, but has recently made moves toward building electric vehicles. In 2021, it purchased an Ohio factory that Lordstown Motors had, itself, bought from General Motors in 2019. Foxconn also agreed to handle the manufacturing of Lordstown’s electric pickup at the site and to make further investments pending certain milestones being met.
According to papers Lordstown Motors filed with the Securities and Exchange Commission on Monday, Foxconn has claimed that Lordstown has not met the agreed- upon requirements and, so, Foxconn is refusing to follow through with agreed-upon future investments.
In April, Lordstown Motors received a letter from Nasdaq notifying the company that, because of its low stock price, the company was in danger of being delisted from the exchange. Because of that letter, according to Lordstown, Foxconn claimed the company had not met the investment agreements.
Lordstown is disputing Foxconn’s claims but, if those investments don’t come through, “the Company will be deprived of critical funding necessary for its operations,” according to Lordstown’s SEC filing.
“Foxconn’s actions are completely unwarranted,” Lordstown said in a statment. “Their course of conduct has resulted in material — and what is becoming irreparable — harm to the company. We intend to continue our efforts to minimize the damage and work with Foxconn to find an amicable path 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 various courses of action as it pertains to their listing status with NASDAQ. In the meantime, we remain open to continuing our discussion and working together to reach a mutually acceptable outcome that benefits our respective stakeholders.”
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, it warned it didn’t have enough money to continue through the next couple of years without further investment. That same month it also clarified that it didn’t actually have binding orders at that time for its truck.
The company, based in the Ohio town from which it took its name, had always planned to manufacture electric pickups 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 General Motors will enter the market with electric trucks from its Chevrolet and GMC brands next year.
Late last year, the company announced it was ready to deliver its first Lordstown Endurance pickups, which were produced with Foxconn’s assistance.