In 2020 and 2021, we had several months when enthusiasm for new EV manufacturers was crossed with the resurgence of blank-check companies. Also called special purpose acquisition companies, or SPACs, these listed shell companies promised quick access to capital and a path to the public markets, and a wide array of tech and tech-ish companies took them up on the offer.
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In 2020 and 2021, several electric vehicle companies took the SPAC route to raise quick cash and go public, especially because investors were pretty OK with investing in such experimental transactions. Full of enthusiasm, these companies’ investor presentations showed a clear path to production and stellar profits.
It’s obvious in retrospect, but the results often proved to be messy.
U.S.-based EV company Lordstown Motors is one such example. Today, the company filed for bankruptcy protection and sued its former partner Foxconn at the same time. As TechCrunch reported earlier this morning:
Lordstown Motors has made good on its threat to sue Foxconn, the Taiwanese company best known for manufacturing Apple’s iPhones. The EV company took legal action against Foxconn Tuesday, and simultaneously filed for bankruptcy and put itself up for sale. […]
In its complaint, Lordstown says Foxconn misled the EV maker about collaborating on vehicle development plans and was “not the partner that it promised to be.” The complaint accuses Foxconn of pretending to support the Endurance pickup truck and future joint product development in order to secure ownership over Lordstown’s most valuable asset, the Ohio manufacturing plant, and to poach some of Lordstown’s skilled manufacturing and operational employees.
It would be easy to dismiss Lordstown’s failure as the result of a dispute between the two companies. But that would be wrong. In reality, the Lordstown saga is a blend of pure SPAC nasty. Let’s take into account a few pertinent facts to form our opinions.
Lordstown’s SPAC journey
TechCrunch’s reporting on Lordstown has been voluminous and broad, so if you want the true blow-by-blow, please start there. For everyone else content with a summary, allow me: