(New York) US electric pickup truck maker Lordstown Motors has filed for bankruptcy and is suing Taiwanese electronics giant Foxconn, which it holds responsible, it said in a statement on Tuesday.
Lordstown sued Foxconn for “fraud” and “willful and consistent breach of business and financial commitments,” according to the statement.
Foxconn’s actions “have caused material harm to the company and its prospects,” Lordstown said. As a result, Lordstown filed for Chapter 11 bankruptcy protection.
Foxconn, the main supplier of the American Apple, plays a key role in the assembly of iPhones and other products of major international brands. As part of its diversification, the group has turned to the production of electric vehicles, which it wants to make a pillar of its development.
In this context, Foxconn bought its vehicle assembly plant in Lordstown, Ohio, in May last year.
With the deal, Lordstown had “agreed to divest its most valuable assets to Foxconn,” argues the automaker, founded in 2018, “against assurances that Foxconn would support the development of its Endurance vans.”
Lordstown believes that “Foxconn had no intention of honoring its commitments, particularly with regard to the establishment of a new vehicle development platform”.
Lordstown had indicated in early June that he was considering suing Foxconn to force it to take a stake in its capital, as he had initially promised, before backtracking.
Foxconn reacted by denying these accusations. “Hon Hai Technology Group (Foxconn) has maintained a positive attitude” in negotiations with Lordstown to assist in its financial difficulties, he said on Tuesday.
“Foxconn wanted to continue discussions and find a solution satisfactory to all stakeholders, without resorting to baseless legal action, but the two parties failed to reach a consensus,” he continued, saying he reserved the right to take legal action as a result of Lordstown’s “spurious comments”.
In electronic trading before the opening of the New York Stock Exchange, Lordstown’s stock fell more than 54% to $1.2. The day before, it had closed at $2.7, an 85% drop since the start of the year.