So, here’s a new wrinkle in a years-long business partnership between two electric vehicle (EV) manufacturers. Reportedly, Workhorse (NASDAQ:WKHS) revealed in a Securities and Exchange Commission (SEC) filing that it received a letter from fellow EV maker Lordstown Motors (NASDAQ:RIDE). What’s in that letter doesn’t seem to bother RIDE stock investors today. Yet, there may be problems afoot.
Let’s go back to where it all started. Apparently, Workhorse has an intellectual property (IP) agreement with Lordstown Motors that dates back to Nov. 7, 2019. That agreement gives Lordstown IP rights related to “certain electric pickup trucks” in exchange for things such as royalty and commission payments on Lordstown’s sales of those vehicles.
Workhorse is now saying Lordstown wants to end that agreement as of March 27. It’s not clear exactly why Lordstown Motors would seek to do this. Is there a breakdown in business relations between the two EV manufacturers?
Perhaps there is, as it seems there’s a potential conflict pertaining to what happens after the Workhorse-Lordstown agreement is terminated. Workhorse evidently believes Lordstown Motors still has to pay any due royalties to Workhorse after the termination of the agreement, if Lordstown did in fact sell any vehicles.
What’s Happening with RIDE Stock?
It’s a complicated situation that could get messy. What are onlookers and financial traders to make of all this? Due to the conflict between the two EV manufacturers, it might be assumed that RIDE stock would fall this morning.
Yet, that’s not what happened. Believe it or not, the Lordstown Motors share price actually jumped more than 5% early in today’s trading session.
There’s more to the story, though. The plot thickens, as Workhorse claims Lordstown Motors hasn’t informed Workhorse that it “has sold any Vehicles since the date of the Agreement.”
Also, Workhorse says it can’t predict how many vehicles Lordstown Motors actually sold, and hence whether any royalty payments are due. Is Workhorse suggesting Lordstown sold vehicles but isn’t reporting those sales?
Don’t be surprised if this isn’t the last you’ll hear about this conflict between Workhorse and Lordstown Motors. For now, though, it’s interesting to witness the buying activity in RIDE stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.