Lordstown Motors Files for Bankruptcy After 5 Years of Empty Promises
The once $5-billion company is now worth $30 million.
Electric vehicle startup Lordstown Motors filed for bankruptcy today. Since 2018, the publicly traded company has planned to produce an electric pickup called the Endurance, however, it has struggled to build cars and failed to secure funding to continue its efforts.
The automaker has shipped a small number of trucks to customers, but investment from Taiwan-based technology giant Foxconn (which it to continue operations) ultimately fell through. Lordstown now is suing Foxconn for an alleged breach of contract and plans to seek a buyer after receiving Chapter 11 bankruptcy protection. A potential buyer wouldn't need much to take the company private, however. As the Wall Street Journal reports, Lordstown had a peak value of $5 billion in 2021. As of writing, its market cap sits at just $30 million.
Trouble has been brewing at the company for years. After an early prototype vehicle caught fire in 2021, the company's CEO and CFO resigned. General Motors then dumped its small stake several months later. Some trucks were miraculously delivered, though every single unit was recalled for an electrical connection issue. As early as May it was rumored Lordstown's lifeline from Foxconn was on the rocks, and now it has all come crashing down.
For its part, Foxconn says that the automaker made “false comments and malicious attacks” against it and that Lordstown didn't seem interested in upholding their investor agreements. As a result, it's said it will not continue to conduct any negotiations with the Ohio-based company.
In the midst of the pandemic, it was unclear to investors which young electric automakers might succeed or fail. Even startups that made it off the ground like Lucid and Rivian are still struggling financially, and without hundreds of millions of dollars in support from partners and investors, it's unlikely they would still be in business. Lordstown, along with Faraday Future and others, were seen as potential winners in the race towards electrification. A lack of unique technology or manufacturing expertise has doomed them to something along the lines of automotive purgatory now. Electric truck builder Nikola could also be included in this group.
The automaker's failure has been seen as inevitable for a long time. Whether or not the company will manage some kind of recovery or simply be purchased for its assets, is yet to be seen.
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