Hon Hai partner Lordstown Automobile files for bankruptcy protection, the electric vehicle industry faces challenges

News on June 27, according to Reuters, after nearly a month of disputes, Lordstown Motors, Foxconn’s electric vehicle partner in the United States, filed for bankruptcy protection due to huge losses.

According to reports, Lordstown Automotive has filed for Chapter 11 bankruptcy protection in the Delaware Court of Chancery. According to people familiar with the matter, Lordstown Automobile’s outstanding debt is as high as US$100 million to US$500 million (approximately 724 million to 3.62 billion yuan), which is a huge amount.

Last year, Lordstown Automobile reached an OEM agreement with Hon Hai, becoming Hon Hai’s first OEM service customer in the commercial vehicle field. Hon Hai and its affiliates have invested a total of US$277.7 million (approximately 2.011 billion yuan) to help Lordstown Motors mass-produce its electric pickup truck "Endurance". After delivering the first 500 electric pickup trucks, the company ran into trouble due to quality issues and was forced to halt production. Hon Hai later terminated its investment in Lordstown Automotive, leading to a rift between the two companies.

According to the editor’s understanding, Lordstown Auto’s share price plummeted 7.2% at the close yesterday, falling to US$2.765 (approximately 20 yuan), with a market value of only US$44.06 million (approximately 319 million yuan) , setting a record low for the company’s share price.

Lordstown Motors' bankruptcy filing indicates that the American electric vehicle manufacturer is facing a serious crisis.. This has also made the entire electric vehicle industry realize that although the market prospects are bright, it is also facing fierce competition and quality challenges. This incident is also a major warning for Hon Hai, prompting them to adopt a more prudent attitude when selecting partners and investment projects. Due to industry changes and uncertainties, Hon Hai will need to re-examine the strategy and development direction of its electric vehicle business to adapt to future development trends.

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