Lordstown Motors is one of the most notable electric vehicle companies on the US stock market because this unit was praised by President Donald Trump. However, recently, information about bankruptcy has caused the company's stock price to continue to fall without stopping.
Lordstown Motors' bankruptcy announcement came after the company had a conflict with its partner Foxconn. Specifically, Foxconn had an agreement to manufacture pickup trucks for Lordstown at a factory built in Ohio. However, Foxconn later announced that it would end the cooperation. This put Lordstown Motors in a difficult situation and could go bankrupt if it could not find a replacement partner.
US electric vehicle startup Lordstown Motors has just announced bankruptcy, its stock once reached 400 USD, now only 1.43 USD (Photo TL)
The news immediately caused Lordstown shares to fall 48% to more than $1.43/share. This continued to be a shock for the company when Lordsdown's stock price had climbed to $400/share in 2021.
Lordstown blamed and filed a lawsuit against Foxconn for breach of contract, non-compliance with the agreement that both parties agreed to and causing the company's bankruptcy. In contrast, Foxconn denied the allegations made by Lordstown.
The conflict between Lordstown and Foxconn began last November when the two sides agreed to cooperate, with Foxconn investing $170 million in Lordstown and taking two seats on the board. This agreement helps supplement capital for the electric car startup.
Also under this agreement, Foxconn will buy an electric vehicle factory from Lordstown. However, from the beginning of 2023, Lordstown asked Foxconn to stop production because the cost of producing a car exceeded the intended selling price of $65,000. All the conflicts started from here, causing this electric vehicle startup to go bankrupt.
The Lordstown case is a typical example of the concept of an electric vehicle bubble in the US stock market. Because in the past few years, electric vehicle startups have been continuously valued at sky-high prices, but then their stocks have plummeted. Currently, Lordstown's total assets are at $500 million, but most of that is debt.
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