Editor’s note: Updates throughout with Q4 earnings and additional product plans
Electric delivery van maker Workhorse Group expects to build no trucks in the first half of the year other than a few of its to-be-discontinued C1000 step van from abundant leftover parts.
Meanwhile, to bridge the gap toward new Class 3-6 trucks in 2023 and 2024, the Cincinnati-based company will finish and sell and a version of GreenPower Motor Co.’s medium-duty Class 4 vehicle.
But even that addition is likely to amount to 250 trucks or a few more by the end of the year, Workhorse CEO Rich Dauch said Tuesday as the company reported a sea of red ink for Q4 and all of 2021.
Workhorse will begin building a W56 platform for the Class 5 and 6 delivery van and truck market in 2023 followed by a W34 platform in 2024 that builds on technology and field experiences from legacy E-Gen and C-1000 trucks.
Under Dauch, appointed last July, Workhorse (NASDAQ: WKHS) did a complete product review and determined its products were not ready for prime time.
Having completed Federal Motor Vehicle Safety Standards compliance and correcting issues that led to the recall of 41 vans sold in 2021, Workhorse is repairing existing C-1000s and will build 50 to 75 more of the vans from inventory before retiring the product except for service parts.
Workhorse has no contracts with customers that include long-term commitments or minimum volumes to ensure future sales of vehicles, the company said in its 10-K filing with the Securities and Exchange Commission on Tuesday.
GreenPower partnership
GreenPower’s zero-emissions EV Star is used in cargo and delivery, shuttle, transit and school bus markets. Workhorse will get 1,500 cabs and chassis that it will fit with its battery-electric system and sell in North America as the W750 step van beginning in Q3.
The W750 will feature up to 150 miles of all-electric range, with a payload capacity of 5,000 pounds and 750 cublic feet of capacity with standard 60kW direct current (DC) fast charging.
GreenPower (NASDAQ: GP) will deliver the cabs and chassis over a 21-month schedule. Workhorse will complete the manufacturing process and deliver finished step vans to its U.S. and Canadian customers from its Union City, Indiana, plant.
In the GreenPower arrangement, which could be extended, Workhorse gets a product it did not offer that keeps the brand relevant during its engineering and manufacturing makeover.
“Our partnership with GreenPower is a crucial step in a multipronged effort to redefine our product portfolio,” Dauch said in a press release Tuesday.
The stopgap move gives Workhorse something to sell while it starts over with the W56 and W34 and pursues its Horsefly drone business. It has tested drones that lift off from and return to an opening in its trucks’ roof.
Watch now: Prospects challenging for Workhorse Group and Lordstown Motors
By the numbers
Not counting returns and allowances for the C-1000 recall, Q4 sales were a negative $2 million compared to a positive $700,000 in the year-ago quarter. It projects revenue of $25 million this year.
Net interest expense swelled to $35.7 million from $4.9 million in the same period last year, primarily driven by losses on exchange of Workhorse convertible notes to common stock.
The Q4 net loss was $156.1 million compared to net income of $280.5 million in the same period last year when Workhorse booked gains from its former stake in Lordstown Motors Corp. Dauch ordered the sale of Workhorse’s 10% stake in LMC, which was awarded in exchange for a technology license on intellectual property for an electric pickup truck that Workhorse did not have the money to build.
Workhorse had approximately $201 million in cash and cash equivalents as of Dec. 31.
Financial and quality missteps
Founded in 2007 as Amp Electric by Steve Burns, Workhorse has stumbled for most of its existence, losing a first-mover advantage in electric pickup-and-delivery vans because of financial and quality missteps.
Workhorse became a meme stock in late 2020 and early 2021 as it competed but ultimately was passed over in consideration for the $6 billion U.S. Postal Service contract for next-generation delivery vehicles. Months of drama followed as Workhorse tried in federal claims court to get the contract award to Oshkosh Truck Co. overturned.
When Dauch took over the Cincinnati-based company, he withdrew the legal action, saying that suing the government from which it hoped to win business was unwise.
Workhorse is continuing to cooperate with SEC and Department of Justice investigations of the company. It offered no substantive update in its 10-K other than saying it had not received any questions to date from the DOJ.
Workhorse shares rose 33 cents or 10.70% to $3.46 intraday Tuesday.
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