Workhorse Group (NASDAQ: WKHS) will meet face-to-face with the U.S. Postal Service on Wednesday and may fight to be included in the program for next-generation mail delivery trucks.
The Cincinnati-based company was stunned last Tuesday when the Postal Service awarded a 10-year contract worth an initial $482 million to defense contractor Oshkosh Truck Co. (NYSE: OSK) for the Next Generation Delivery Vehicles.
“This is not the result we had anticipated or hoped for,” Workhorse CEO Duane Hughes said on the company’s Q4 earnings call Monday. “We understand that many people want answers in a timely manner. We intend to explore all avenues that are available to us.”
Workhorse was the only finalist in the competition offering a full battery-electric vehicle (BEV). Oshkosh submitted a gasoline-powered prototype for evaluation. It recently said it could provide about 10% electric trucks within the 50,000 to 165,000 mail trucks initially planned.
Though Hughes did not mention suing over the award, there is precedent. In November 2019, Amazon sued the Pentagon over the awarding of a $10 billion military contract to Microsoft. Amazon claimed President Donald Trump’s animus toward its founder and CEO, Jeff Bezos, influenced the awarding of the contract.
Enter politics
Politics are becoming a factor in the Postal Service award, which followed years of delays. Postmaster General Louis DeJoy, a holdover from the Trump administration, reports to a nine-member board of governors. Three members were appointed by Trump. President Joe Biden recently filled three openings.
Biden signed an executive order Jan. 25 requiring the nation’s 645,000-vehicle fleet to convert to electric vehicles. The Postal Service accounts for about 35% of those.
DeJoy told a congressional subcommittee that he did not see reduced maintenance cost of electric vehicles providing a significant advantage over internal combustion engines. He also said charging infrastructure was expensive compared to maintenance.
Electric vehicles cost more to acquire but the return on investment can be as little as two to three years because of fuel and maintenance savings. Most fleets report up to 75% maintenance savings on battery-electric vehicles (BEVs) because they have fewer parts and use fewer fluids.
“Due to the decision to go [with] combustion-engine vehicles in the fleet at the post office, I think what we’re seeing is a speedup in what President Biden is doing to put the board of governors in a way to support his plan going forward,” Hughes said.
Both Ohio, home to Workhorse, and Wisconsin, which is Oshkosh’s base, are hotly contested states politically. Trump won Ohio in the November presidential election. Biden was victorious in Wisconsin.
Defending its turf
Though Workhorse has produced only about 20 of its C-Series composite body electric delivery vans to date, customers are sticking by the company, Hughes said.
“What we’re hearing from our customers is a lot of the frustration you’re hearing from the public as well as the Democratic senators,” he said. “We’ve got our customers saying, ‘Keep your head high. … You’ve got the best product out there. We’re with you all the way.’”
Hughes said he could not comment on Oshkosh’s business. But he contrasted the maker of military and severe service vehicles with his company.
“When you have a vehicle that’s going to go anywhere from 18 miles a day to 300 miles a day that’s going to stop many hundreds of times throughout that duty cycle, that puts a lot of different demands on a vehicle than perhaps a military vehicle or a fire truck or an ambulance,” Hughes said.
“We are the most competent EV maker in the last-mile delivery space. It is not like putting any other vehicle out on the road,” he said. “We feel like we are the best solution for anybody who wants to take a fleet all electric, particularly in the last-mile delivery space.”
Related articles:
Oshkosh beats Workhorse for Postal Service delivery vehicle contract
Workhorse scrutinized as Postal Service again delays contract
Hersbird
Going with a company who has made 20 whole trucks to now make 180,000 would be a nightmare. Also hub motors are not reliable especially in the side of the road, digging through snowbanks, the mail trucks spend their lives doing. So an unproven hub motor design, a company that has built a handful of anything, doing lowest bid work making a $25-35k specialized purpose built truck. What could possibly go wrong? Oshkosh just took a Ford Transit van they already make 150,000 a year of and slapped a different body on it. That’s the kind of idea that made the previous LLVs work so well long past their expectations.
James Cook
We ( lettercarriers ) used our personal vehicles to take and deliver the mail. Seems the USPS didn’t have enough vehicles for the carriers. What happened to that? Carriers are only using postal vehicles now?
BM
Should be battery power…not gasoline.
Also needs to be all wheel drive for snow areas.
Black Opal
Well,if Biden signed an order requiring the fleet be electric,than Oshkosh’s contract is nullified. WKHS should be flying back to it’s previous value and beyond.They’ll get orders from USPS, and the order they just got in January for 6200+ trucks cements the resources to deliver, and a big, bright future. Has to be one of the best buys out there right now, since everything else is already topped. peace
Jack Dempsey
That might be true if it were true, but it isn’t so… etc… much less the idea that the Prez can nullify contracts between the USPS and their suppliers. It’s not a Federal Agency.
POTUS exec order is shown here:
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/25/executive-order-on-ensuring-the-future-is-made-in-all-of-america-by-all-of-americas-workers/
Wait, wait… but He (The Joe, pbuh) said this on the day of the Order publication: “The federal government also owns an enormous fleet of vehicles, which we’re going to replace with clean electric vehicles made right here in America made by American workers,”
Yup, he did SAY that, just like he said that there was no vaccine until he took office, or that minorities don’t know how to sign up online. But The Joe sez a lotta stuff that doesn’t hold water (if Corn Pop were still alive, he’d affirm this). His Order (an ORDER, I tell ya!!) does not even have the word “electric” anywhere in its ~2200 word text.
Funny how WKHS news goes.
“They have orders for 1800 UPS trucks” except they didn’t
“They’re going to certify the Surefly for service by 2019” except they didn’t
“They’re the leader in the USPS competition” except they weren’t
“Biden directed all-electric vehicles” except he never did
Gotta hand it to them, they built a helluva share price on BS.
Hersbird
The original Post Office bid nowhere listed any requirement of BEV or hybrid. So they would have to go back to ground zero of over 5 years ago and start the whole process over again actually specifying BEV as a requirement.