Lordstown Motors Corp., an original equipment manufacturer of electric light-duty vehicles, on Tuesday sued Hon Hai Precision Industry Co., the parent company of Foxconn, for alleged fraud and contractual breaches. This legal action came on the heels of the company filing for Chapter 11 bankruptcy.
The company said filing for bankruptcy will allow it to maximize the value of its assets, including an EV pickup truck and Lordstown’s intellectual property.
In 2021, Foxconn announced plans to acquire a former GM plant in Lordstown, Ohio for its initial production of electric vehicles instead of using its existing facility or land in Mount Pleasant. The plant was owned by Lordstown Motors Corp. before being purchased by Foxconn.
Foxconn also agreed to purchase $50 million in Lordstown stock while both companies negotiated a contract manufacturing agreement for Foxconn to make Lordstown Motors’ Endurance full-size pickup truck at the facility. Foxconn would have certain rights on future vehicle programs.
Tuesday’s lawsuit alleges Foxconn’s “fraud and willful and consistent failure to live up to its commercial and financial commitments” have led to material damage to Lordstown.
“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,” said Edward Hightower, chief executive officer and president of Lordstown. “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. We will vigorously pursue our litigation claims against Foxconn accordingly.”
Lordstown is seeking court approval to move forward with the sale of its Endurance vehicle and related assets to a new owner.
“We remain confident that an orderly, expedited sale process will maximize value for our stakeholders and enable the talent and technology behind the Endurance to find new and supportive ownership,” said Hightower.
In a Tuesday statement, Foxconn said it reserves the right to pursue legal actions against Lordstown and suspend negotiations due to the lawsuit.
“(Foxconn) has been holding a positive attitude in conducting constructive negotiations with Lordstown Motors Corp (LMC) and in assisting LMC in finding a solution to its financial difficulties,” said the company in a statement. “However, during this time, LMC has
continuously attempted to mislead the public and has been reluctant to perform the investment agreement between the two parties in accordance with its terms. Foxconn originally hoped to continue discussions and reach a solution that could satisfy all stakeholders, without resorting to baseless legal actions, but so far the two parties have yet to reach a consensus.”
