(Bloomberg) – Lordstown Motors Corp. fell by more than half after the electric vehicle maker, once hailed by former US President Donald Trump for saving car manufacturing jobs, filed for bankruptcy.
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Last month, the electric pickup truck maker warned that the company could fail if it failed to resolve a dispute with Foxconn Technology Group and its parent Hon Hai Technology Group, after the iPhone maker told the startup that he was ready to back out of a producing partnership.
Shares of Lordstown fell 57% in premarket trading in the United States, after closing at $2.77 in New York on Monday.
The company’s demise caps several torrid years for the electric pickup truck maker, which is part of a wave of startups whose sky-high valuations following reverse mergers have fallen victim to sharp corrections. In its filing, Lordstown listed up to $500 million in assets and liabilities with a sale plan that included its Endurance truck.
In November, Foxconn agreed to invest up to $170 million in Lordstown and take two seats on the board. The deal gave the electric vehicle maker much-needed capital while giving the Taiwanese automaker a firmer footing in car production.
As part of the deal, Foxconn purchased a former General Motors Co. plant in Lordstown, Ohio from the company, and planned to manufacture Lordstown’s first vehicle under contract. But in January, Lordstown asked Foxconn to suspend production because the cost to manufacture the Endurance exceeded the target selling price of $65,000 – and said it would need another partner beyond that. of Foxconn to share the costs.
The bankruptcy filing follows the company through several crises, including battling short seller claims and a Securities and Exchange Commission investigation into inflated vehicle pre-orders, before signing the deal with Foxconn in a bid to raise much-needed funds.
A Foxconn representative could not provide immediate comment when contacted by Bloomberg about the matter.
–With help from Allison McNeely, Sean O’Kane, Janine Phakdeetham and Debby Wu.
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