• June 27, 2023
  • 5 minutes read

Electric Truck Maker Lordstown Motors Files For Bankruptcy

Another company that debuted on the public markets during the 2020-21 special-purpose acquisition company (SPAC) frenzy has bitten the dust.…

Another company that debuted on the public markets during the 2020-21 special-purpose acquisition company (SPAC) frenzy has bitten the dust. Lordstown Motors (NASDAQ: RIDE), an electric truck maker, has filed for Chapter 11 bankruptcy protection, it announced on Tuesday.

Alongside its bankruptcy filing, Lordstown also announced litigation against Hon Hai Technology Group “Foxconn” (LSE: HHPD), a Taiwanese manufacturing giant, alleging it reneged on an agreed investment to fund its operations.

  • Last November, Foxconn struck a deal to invest as much as $170mn in Lordstown and assume two board seats. The deal gave Lordstown much-needed capital to finance its expensive manufacturing operations and Foxconn a foothold in automotive manufacturing (the company is best known as the primary contract manufacturer for Apple’s iPhones). Before striking this deal, Foxconn had already purchased Lordstown’s only manufacturing facility and agreed to assemble the company’s Endurance truck.


  • But in January 2023, Lordstown asked Foxconn to suspend production of its pickup truck because the cost of assembling each unit exceeded the intended sale price. The company said it would need another manufacturing partner to share costs with Foxconn.

In its recent statement, Lordstown accused Foxconn of “willful and consistent failure to live up to its commercial and financial commitments” and claimed its actions caused significant damage. The electric truck startup has filed for bankruptcy protection and said it would kickstart a process to sell the Endurance truck and related assets.

Lordstown’s bankruptcy filing listed both assets and liabilities of up to $500mn. The company had just $108mn in cash as of March end after losing $171mn in this year’s first quarter.

  • The collapse didn’t come as a surprise; Lordstown had warned this May that it risked bankruptcy if it didn’t raise additional capital.

The bankruptcy filing caps years of turmoil at Lordstown, which raised $675mn after merging with a special-purpose acquisition vehicle in 2020. The company had struggled to produce vehicles since launching in 2019 with an Ohio factory bought from American carmaker General Motors (the company loaned Lordstown $40mn to buy the shuttered factory).

Lordstown took a major hit in 2021 when Hindenburg Research, a famous short-selling investor, accused it of falsifying orders to lure public market investors. The U.S. Securities and Exchange Commission (SEC) and the US attorney of the southern district of New York launched respective investigations after Hindenburg’s accusation, and Lordstown has said it’s cooperating in both cases.

  • Lordstown Motors is the latest example of an electric car startup that debuted on the public markets via the SPAC route and caused heavy losses for investors. Last June, Michigan-based Electric Last Mile filed for Chapter 7 bankruptcy. Mullen Automotive (which later acquired Electric Last Mile), Canoo, Arrival, Faraday Future, and Nikola have all gotten delisting warnings due to low (<$1) share prices.


  • Needless to say, most SPAC mergers of the 2020-21 frenzy have ended in sad tales for investors. It’s even worse if you invested in an electric carmaker. Lordstown is down, but several more could soon join it.

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