In a filing to the SEC, electric vehicle start-up Lordstown Motors warns that it may go bankrupt against the backdrop of contract manufacturer Foxconn walking away from a crucial deal. And there is also Lordstown own share price.

Lordstown had received a letter from Foxconn claiming that the start-up had breached an investment contract because its share value had fallen below one US dollar per share for 30 consecutive trading days, triggering a delisting notification from the US stock exchange Nasdaq. In other words, according to Nasdaq rules, Lordstown would have to be delisted.

Foxconn and Lordstown had entered into an agreement in November 2022 under which Foxconn would invest up to $170 million (€154 million) in the US startup, amounting to a nearly 20%-stake. Foxconn paid the first $52.7 million (€47.75 million) due last year. But in light of Nasdaq’s delisting notice, further Foxconn payments are at risk and could result in insolvency.

Still, under the terms of the original deal, Foxconn is supposed to invest $47.3 million within ten days of regulatory approval by the Committee on Foreign Investment in the United States. Lordstown said that approval was secured on 25 April, meaning that Foxconn must make that investment by 8 May.

The two companies had also agreed to jointly complete a plan to develop a new electric vehicle by 7 May. According to a report, Foxconn would also have committed to investing a further US$70 million (€63.4 million). According to Lordstown, this plan has not yet been finalised because Foxconn is not making “commercially reasonable efforts” to complete it.

In a statement to CNBC, Lordstown added that Foxconn’s actions are “completely unwarranted” and have resulted in “material – and what is becoming irreparable – harm to the company.”

Lordstown warned in the filing that it might be forced to file for bankruptcy protection if the Foxconn deal falls through. The company still had $221.7 million as of the end of 2022, but it lost over $100 million in the fourth quarter.

It is also not the first time the startup has been plagued with financial difficulty. In fact, the Foxconn deal came a year after the Taiwanese manufacturer bought the Lordstown factory in Ohio. Production of the Endurance e-pickup truck under Foxconn’s direction started in September 2022.

cnbc.com, lordstownmotors.com