Commercial EV startup Workhorse will be face-to-face with the United States Post Office on March 3 to learn more about the agency’s decision to have defense manufacturer Oshkosh build the new fleet of mail vans. Workhorse was the last remaining bidder to build an all-electric fleet, an idea that President Biden backed with an executive order shortly after taking office.
“This is not the result we expected or hoped for,” CEO Duane Hughes said in a telephone conversation Monday morning following the announcement of the financial results for Workhorses for 2020. “To be clear, we intend to to explore all possibilities available to us. ”
Asked about the meeting, USPS spokeswoman Kim Frum said she “has no information I can share at this time.”
The USPS announced the new truck last week after a year-long bidding process that allowed several manufacturers from around the world to build and store prototypes in the hopes of winning the contract, which would eventually be worth billions of dollars. A new mail vehicle is urgently needed as the current trucks – built by defense contractor Grumman – are stretched beyond their expected expiration date, costing the agency a fortune. Many trucks even caught fire. They also do not have modern features like air conditioning or airbags.
Many of these problems address Oshkosh’s mail van. Following last week’s announcement, Postmaster General Louis DeJoy told Congress that only 10 percent of the new mail trucks built by Oshkosh would be electric. Oshkosh and the USPS claim that the vehicles were designed to be converted from gas to electric power later, but offered no projections on how much it would cost, who would pay for it, or any other information about this part of the plan.
Workhorse does not have much record so far, but UPS is one of the companies that ordered its vehicles. And the chances of winning the bid seem to have improved earlier this year when President Biden signed an executive order ordering federal officials to find a way to switch the entire government fleet to electric vehicles. (USPS mail vehicles make up about a third of the more than 600,000 vehicles in the government fleet.)
Hughes said in the call that he believes Biden’s decision to add new governors to the board overseeing the USPS is part of an effort to oust DeJoy and further support the push to electrify the mail fleet. .
Regardless of the outcome of the meeting with the USPS, Hughes and Steve Schrader, CFO of Workhorse, spent much of Monday’s call to assure investors that the company has a way forward without the contract.
“I’ve always said it: with or without the post office, we have a business here, and we need to focus on being able to build the business,” Hughes said, although he acknowledged that the postal truck contract was a game changer. ”
Before that, Hughes and Schrader spoke at length about how Workhorse now has more than 8,000 orders for its commercial electric delivery trucks and how it plans to work through the backlog. The company recorded just $ 1.4 million in sales in 2020, with $ 652,000 of that in the last quarter of the year. The cost of the 2020 sales was also about $ 13 million, as Workhorse’s production was so low for the year because it handled a COVID-19 outbreak at its Ohio plant.
Schrader said Workhorse is trying to make as many as three trucks a day this month, with the goal of making ten a day by the end of June. By achieving a production capacity of 200 trucks per month, Workhorse could go straight, Schrader said.
Workhorse flourished for years, but was able to survive thanks to loans from hedge funds and by selling parts of its business. The best example of this is Lordstown Motors, the start of an electric pickup truck created by former Workhorse CEO (and founder) Steve Burns. Workhorse basically handed over the intellectual property (and order book) for a pickup he developed to Lordstown Motors in exchange for a 1 percent piece of the funding raised by the new startup, a royalty on the first 200,000 vehicles sold, and a 10 percent stake.
The ownership stake is now worth about $ 330 million, according to Workhorse’s latest financial report submitted on Monday. Lordstown Motors was also announced at the end of 2020, so Workhorse eventually earned $ 4.8 million as a result of the accompanying funding round.
This is in addition to approximately $ 270 million in separate financing that Workhorse closed in 2020.
“Needless to say, it’s been an incredible year for us, ‘Hughes said.