Following a troubled relationship with its investment and manufacturing partner Foxtron, electric pickup maker Lordstown Motors has filed for protection against debtors. In the eponymous town, the company had the Endurance assembled in a factory that it had sold to the Taiwanese firm. But as the latter allegedly broke the terms of an investment agreement, the future of Lordstown Motors turned bleak.

Foxtron, the automotive branch of iPhone maker Foxconn, bought the Lordstown plant in 2021. It has invested 150 million dollars in the site and promised to inject 170 million dollars to solve production problems with Endurance. The Taiwanese company also builds an electric tractor called Monarch in Lordstown.

‘False’ and ‘malicious’

But the financial situation of Lordstown Motors worsened severely at the beginning of the year. When its stock plummeted under 1 dollar, Foxtron decided to walk away from the much-needed investment.

According to Lordstown, this move breaks the contract, and it has, therefore, filed a lawsuit for fraud. It says that it was deliberately starved by Foxtron, which ultimately led to its bankruptcy. Foxtron calls these allegations ‘false’ and ‘malicious’.

Lordstown was one of the hailed EV start-ups, promising to shake up conventionalism in the automotive industry. Symbolically based in one of the plants that General Motors laid off, the company was applauded by ex-president Donald Trump for saving thousands of jobs in the American automotive industry. Previously, the region was hit by an exodus of the workforce.

Suspended production

Lordstown’s founder, Steve Burns, pledged to beat Tesla and Ford to provide them with the first all-electric pickup. In 2021, the stock market followed the promising outlook, sending the company’s shares over 400 dollars.

But it went downhill, and the company turned to the ambitious Taiwanese, scouting for a foothold in the US to keep their business afloat. Burns already offloaded his stock participation before the bankruptcy.

Lordstown did manage to bring a handful of its all-electric Endurance trucks to customers. But they weren’t bullet-proof, and after a recall and quality hiccups, it asked Foxtron to suspend production in February this year as the listing price of 65 000 dollars returned a loss.

Selling off the assets

The filing for Chapter 11 demonstrates once more how precarious it is to kickstart an automotive business from scratch. Also, Rivian, Faraday Future, and Nikola continuously fight insolvency problems.

Protected from its debtors, Lordstown will try to sell the assets, preferably to a newcomer that wants to get a headstart in the EV business. While Foxconn is highly successful in navigating the constraints of electronics manufacturing, the EV sector seems to be a bigger challenge.

Foxconn remains the full owner of the facilities in Lordstown and now loses one client for its EV building service in the US. The company also has a deal with Fisker to manufacture the compact Pear in Lordstown, though sources close to the agreement say that negotiations over cost are still ongoing. This was also the Achilles heel for the Endurance.