Apparently, being pointed out as an example of progress by a President doesn’t always help. Such is the case of Ohio-based electric truck manufacturer Lordstown Motors which filed for Chapter 11 bankruptcy on Tuesday, June 27th.
During the previous administration, then-President Donald Trump hailed Lordstown for keeping manufacturing jobs in the United States at a time when many global businesses have been outsourcing manufacturing processes to other nations. However, this proved to be a flawed assumption as Lordstown never managed to produce a single EV since it began operating in 2018.
What’s Going on Here?
According to documents filed by the company, Lordstown was in conflict with one of its major investors, Taiwan-based contract manufacturer Foxconn.
Foxconn recently accused Lordstown of breaching their investment agreement when the value of the latter’s stock dropped under $1.00 per share. Lordstown, on the other hand, claims that Foxconn did not honor its agreement to infuse additional funding into their company.
Shares of Lordstown fell 45 percent on Tuesday morning, to about $1.50. They had traded at around $400, adjusting for a recent stock split, in early 2021 when investors were incredibly optimistic about the prospects of electric-vehicle start-ups. Lordstown listed its shares on the Nasdaq stock exchange in October 2020 by merging with a special purpose acquisition company called DiamondPeak Holdings.
As of Tuesday morning, Lordstown’s shares dropped by around 45% and closed at $1.50. This is a far cry from where they were in 2021 when Lordstown stock traded at $400 per share; at the time, investors looked forward to the company’s potential in the EV field.
A Brief History
Lordstown was founded back in 2018 by former Workhorse Group chief executive Steve Burns. Coming from another EV firm, Burns bought an old General Motors plant in the Ohio town from whence his company got its name.
The Ohio facility was expected to develop and manufacture electric-powered trucks. However, this experimental idea never came into fruition due to challenges regarding production on a massive scale.