Workhorse Shareholders Still Have Hope Even After The Gut Punch


By now, investors with a finger on the pulse of the EV space have heard what happened to Workhorse (NASDAQ:WKHS) stock on Feb. 23. It tanked big time. 

A Workhorse W-15 hybrid electric pickup truck on display at a branding event in Flatiron Plaza in New York.
Source: Shutterstock

That’s because the United States Postal Service awarded the development contract for its Next Generation Delivery Vehicle (NGDV) to Oshkosh (NYSE:OSK). Oshkosh will build up to 165,000 vehicles for the Postal Service over the next decade. 

Workhorse was considered the front-runner by many, myself included. I was wrong. In the wake of the news, WKHS stock was sent tumbling by 50%. 

Workhorse has vowed to fight against the postal service’s award decision. There’s a lot to discuss here, so let’s get started with what might have gone wrong.


In hindsight it’s clear that Workhorse lacked a strong enough track record. Oshkosh is the much more established vehicle maker. Recent contract awards prove that the company is bonafide. It won the U.S. Military contract to replace the AM General Hummer. The Wisconsin company began delivering the vehicle to the military in 2016 with an initial delivery of 657 vehicles. Oshkosh will deliver nearly 60,000 to the Army and Marines over the lifetime of the contract through 2040. 

Workhorse, by comparison, delivered fewer than 10 vehicles in Q4. It’s fair to say that the Postal Service likely lacked confidence in WKHS stock. Despite the fact that EVs have gained significant traction, I’d also venture to guess that the Postal Service simply isn’t ready to get behind the idea of a 100% electric NGDV. 

The contract award letter is clear: “The vehicles will be equipped with either fuel-efficient internal combustion engines or battery electric powertrains and can be retrofitted to keep pace with advances in electric vehicle technologies.”

This opens up an opportunity for blank check firm Tuscan Holdings Corp. (NASDAQ:THCB), which is taking EV manufacturer Microvast public via a SPAC. Oshkosh recently invested in Microvast and the two companies are committed to jointly developing battery technology.  

In any case, it’s clear that Workhorse represented too much risk for the USPS.

Fighting the USPS Decision

Workhorse issued a press release on March 4 regarding the NGDV award. The company stated that it had met with the USPS to discuss details surrounding the award on the previous day, March 3. 

Workhorse provided no details beyond notification of the meeting with the USPS. CEO Duane Hughes was clear about one thing though, Workhorse is lawyering up: 

“Yesterday’s meeting with the USPS marked the first step in what we expect may be a prolonged process to explore our options and possibly pursue further action related to our NGDV bid. We will continue to follow the proper due course procedures as defined by the USPS and will also look to other options available to us. In the interim, we have retained the services of leading legal and corporate advisory firms, including Akin Gump Straus Hauer & Feld LLP and Mound Cotton Wollan & Greengrass LLP, to identify our options and pursue them effectively.” 

Uncertain Future

The NGDV award news basically halved WKHS stock’s market cap. And on March 1, Workhorse released fourth quarter and full-year earnings reports. 

Markets aren’t giving the company much credit, but it has improved nonetheless. Year-Over-Year Workhorse increased sales by 270%. Its asset base has grown by more than 11-fold in the same period. The company has a backlog of orders for 8,000 vehicles, and it has a $320 million stake in Lordstown Motors (NASDAQ:RIDE). 


As bad as things looked for Workhorse following the USPS contract award, there is reason for some optimism here. I’d hold WKHS shares if you have them now. Of course investors will be keenly awaiting news about litigation related to the contract award. But, also keep a keen eye on deliveries and not just pre-order sales which become a backlog. Workhorse’s challenge is delivery from now on.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

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