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.”
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