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Workhorse narrows loss but misses on Q4 results

Electric truck maker Workhorse Group narrowed its losses in the fourth quarter but missed on analyst estimates of revenue and earnings per share.

Workhorse shares closed Wednesday 14.81% lower at $1.75, not far above its 52-week low of $1.40.

The Cincinnati-based company is continuing a makeover that began with the hiring of veteran auto supplier executive Rich Dauch as CEO in August 2021. 

Workhorse sold 23 units of a GreenPower Motor Co. chassis cab called the W4 CC, generating most of the company’s $3.4 million revenue in Q4. Production of a W750 step van from the same platform begins this quarter followed by the Workhorse-design Class 5-6 W56 in Q3. The WNext Class 3-4 electric step van is due in 2025.

Workers at the Workhorse plant in Union City, Indiana, began assembling and shipping Tropos Technologies’ vehicles under a three-year contract manufacturing agreement with Tropos. Volumes for final assembly in the U.S. market are expected to reach about 2,000 units per year once ramp-up is complete.

Workhorse Group began assembling and shipping vehicles for Tropos Technologies in the fourth quarter under a contract manufacturing arrangement. (Photo: Tropos Technologies)

Workhorse gives up on problem-plagued step van

Workhorse decided in December to give up on the C1000 electric step van that previous management had put into production. Manufacturing delays and quality and reliability problems impacted the C1000 almost from the start. Dauch ordered reengineering of the vans but even that fell short of fixing durability problems.

The company hired 160 new employees and spent $20 million to update its plant and engineering center in Wixom, Michigan. Workhorse will assemble drones for its aviation business in Mason, Ohio, and its testing center in Sharonville, Ohio. 

New engineering hires to design and source new products spiked research and development expenses to $8 million in 2022 compared with $2.8 million in the same period of 2021.

The company is now in “pure execution” mode, Dauch said. 

“Showing somebody something on a PowerPoint is one thing,” he told analysts on a conference call Wednesday. “Actually having to drive the vehicles and see how they work is another thing. And I think our vehicles will sell themselves once we get them in the hands of customers.”

Dauch: Still time for Workhorse to make up lost ground

The troubles with the C1000 vans squandered Workhorse’s perceived first-mover advantage in electric vans. Legacy car and truck makers lead Workhorse in terms of product availability. But it’s not too late, Dauch said.

“We are in the very, very early stages of this transition” to electric vehicles, he said. “You can read all the press publications about how fast we’re going to go in EV. At the end of the day, you have to have the infrastructure in place and you have to have an economic model that works for both the suppliers, the manufacturers and the end-use customers.”

That requires financial incentives and other government help.

“If you take a look at the commercial EV space, there were a lot of projections over the last two or three years, and almost all of them came up short in two areas,” Dauch said. “One, it’s a hell of a lot tougher to go from concept to production, and it costs a hell of a lot more to get there.

“Just go back and look at all the old forecasts of some of the other EV SPACs [special purpose acquisition companies]. Are they coming up short? Have they built their plants, etc.?”

Workhorse debt paid off but cash is tight

Workhorse has been around much longer than the raft of struggling transportation startups. But it has yet to gain significant traction. Its plant, formerly owned by Navistar, was cheaper to renovate than the hundreds of millions of dollars a new plant would cost and the two or more years of construction.

“We were able to get that Union City facility turned around and ready to go in less than six to nine months for about $20 million,” Dauch said. “We’ll put in another $15 million or $20 million this year” for dynamometers, a paint line and automated guided vehicles to move parts around the plant.

After paying off its debt to a hedge fund in equity last year, Workhorse ended the year with $99.4 million in cash and equivalents. Workhorse expects revenue in the range of $75 million to $125 million this year.

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Click for more FreightWaves articles by Alan Adler.