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difficult to continue! Another electric car company may suspend its license and delist.

2024-03-04 Update From: AutoBeta autobeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)07/01 Report--

Another new car maker faces suspension and delisting, this time from American electric car startup Lordstown Motors (hereinafter referred to as "Loddtown Motor"). On June 29th, the media reported that Loddtown Motor said it had received a delisting notice from Nasdaq on June 28. The notice shows that Loddtown Motor does not meet the listing rules and that trading in its Class A common shares will be suspended on July 7, 2023.

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Or affected by the news, Loddtown Motor shares fell nearly 4% in pre-market trading on the same day, while by the last close, Loddtown Motor shares had fallen about 88% this year.

In fact, as early as April 20 this year, Nasdaq issued a "delisting warning letter" to Loddtown Motor, warning that its shares might be delisted. At the same time, Foxconn also informed Loddtown Motor that it had violated the initial investment agreement between the two sides and would stop investing in it because its share price had been below $1 for a long time and did not comply with Nasdaq listing rules. and it is clear that if the problem is not resolved within 30 days, the investment agreement will be terminated.

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In early May, Loddtown Motor also issued a warning document that "may be facing bankruptcy" to the outside world. However, Loddtown Motor finally failed to wait for the savior.

Two days ago, Loddtown Motor announced on its official website that it had filed bankruptcy protection with the Delaware court under Chapter 11 of the US bankruptcy law, while selling the company's assets because it had failed to resolve its previous dispute with Foxconn over its investment. In addition, in a complaint filed in bankruptcy court, Loddtown Motor filed a lawsuit against its partner Foxconn, accusing the company of failing to abide by the investment agreement and a number of other commitments.

Foxconn Group, the parent company of Foxconn, immediately issued a statement on its website in response to Loddtown's lawsuit, saying that Loddtown was constantly trying to mislead Volkswagen and was unwilling to abide by the terms of the investment agreement between the two sides. Hon Hai has been negotiating positively with the other party to help it resolve the financial difficulties caused by its operations. it had hoped to continue consultations and discussions in order to reach a mutually satisfactory solution instead of taking groundless legal action. but so far the two sides have not reached a consensus.

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On June 29th, Loddtown Motor once again said on its website that the Delaware court had approved bankruptcy protection, but the final ruling would not be known until July 27. Meanwhile, Loddtown stressed that it would continue to operate and had a lot of unspent cash on hand.

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Lordstown Motors (Lodstown Motor) is a new American car-building brand founded in 2018 by Steve Burns, former CEO (CEO) of American freight truck manufacturer Workhorse, headquartered in Lourdes Town, Ohio, hence the name Lordstown.

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In 2019, GM closed the plant because of the Cruz shutdown, and in May of the same year, Loddtown acquired GM's Lodstown plant, but soon Lodstown had to sell its plant because of financial problems. Foxconn later took a fancy to the plant and bought the plant for $230 million. Since then, Foxconn has been responsible for investment and production as a contract manufacturer, while Loddtown Motor is in charge of vehicle development.

Lodstown Motor was officially listed on Nasdaq in October 2010. in February 2021, its share price exceeded $400 and its market capitalization peaked at $5 billion. But after Loddtown shares fell below $1 in March and faced the risk of delisting from Nasdaq, Hon Hai informed the company that it planned to withdraw from its investment agreement with Lordstown in November, sparking a dispute between the two sides.

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Currently, Lordstown has only one model, the Endurance, which is positioned as an electric commercial pickup and sells for about $50, 000. Production of the car, which is scheduled to be made by Foxconn, will start at the end of 2022, but disappointingly, Foxconn was forced to stop production of just 40 cars for Loddtown cars. Loddtown Motor admitted in the fourth quarter of 2022 that as of February 2023, it had produced only about 40 Endurance vehicles, of which only 6 vehicles had been delivered, far below the expected target.

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Only five years after its establishment, Loddtown Motor finally went to the stage of filing for bankruptcy. At present, the dispute between Loddtown Motor and Foxconn has not been properly resolved, and the two sides finally went to court. But in fact, Foxconn is not entirely to blame for Loddtown's loneliness. At the end of the fourth quarter of 2022, Loddtown had a cash balance of $121.4 million, down from $154.2 million in the previous quarter, and revenue of $194000, below analysts' estimates of $1.29 million, according to the data. the net loss widened to $102.3 million from $81.2 million in the same period in 2021, including $36.5m in impairment charges mainly due to a fall in the price of its shares. According to the latest data, as of the end of March, Loddtown Motor had only $108.1 million (about 781 million yuan) in paper cash.

Since entering 2023, the knockout stages of automobile enterprises have become more and more intense, especially the new forces of car-building are facing a severe situation of "survival of the fittest". Like many new car makers going bankrupt, Loddtown Motor also faces the problem of high debt and low stock price. Judging from its operating condition, Loddtown Automobile has reached the line of life and death and is difficult to sustain.

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