Electric truck manufacturer Lordstown Motors announced Tuesday morning that it is filing for Chapter 11 bankruptcy in an effort to "maximize the value" of its assets.
The bankruptcy filing comes five years after the Ohio-based company was founded and three years after former President Trump hosted it at the White House. In a release Tuesday, Lordstown Motors said it would file for bankruptcy, put itself up for sale and file a lawsuit against Taiwanese tech company Foxconn, which previously agreed to provide critical funding for the EV maker.
"As one of the early entrants to the EV industry, we have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential — and had subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform," Lordstown CEO Edward Hightower said in a statement.
"Despite our best efforts and earnest commitment to the partnership, Foxconn willfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximize the value of Lordstown's assets for the benefit of our stakeholders," Hightower continued. "We will vigorously pursue our litigation claims against Foxconn accordingly."
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In 2021, Lordstown Motors and Foxconn announced they had reached an agreement for Foxconn to pay Lordstown Motors $230 million for its Lordstown, Ohio, factory and purchase $50 million worth of common stock from the company. Then, last year, Foxconn said it would invest another $170 million in Lordstown Motors, months after the Inflation Reduction Act was signed into law.
While Foxconn executed the first payment under the 2022 deal, it failed to make a second payment earlier this year and accused Lordstown of violating a condition of the deal after its share price fell below $1 per share amid floundering sales and manufacturing struggles.
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In February, the company reported that it had, up to that point, only manufactured 31 vehicles for sale, but was pausing production to address quality issues.
Lordstown Motors was repeatedly touted by the Trump administration as a success. In September 2020, Trump hosted the company for an event at the White House celebrating its Endurance, one of the first-ever electric trucks. He also applauded the company for purchasing a former General Motors plant to make the vehicles.
"Well, ladies and gentlemen, this is incredible. So this is a vehicle where the — essentially, the engines — the motor’s engines are in the wheels. They’re in the wheels — in all four wheels," Trump stated. "This is a company that went in — and, I guess, General Motors is your partner. But they went in, and they have an incredible vehicle."
"This is a great technology. They’ve known it," he continued. "But until this, nobody has actually done it, having the motors in each wheel — having motors in each wheel, and they’re very well coordinated, and you can work them individually or whatever is necessary by computer. It’s an incredible concept. I think it’s an incredible concept."
Lordstown Motors founder and former CEO Steve Burns, who attended the White House event, ultimately resigned a year later after the company was accused of fabricating sales numbers, Bloomberg reported.
