Commercial EV startup Workhorse will have a “face-to-face” with the United States Post Office on March 3rd to find out more about the agency’s decision to have defense manufacturer Oshkosh build the new fleet of mail trucks. Workhorse was the last remaining bidder pitching to build an all-electric fleet, an idea that President Biden supported with an executive order shortly after he took office.
“This is not the result we had anticipated or hoped for,” CEO Duane Hughes said on a conference call Monday morning following the release of Workhorses financial results for 2020. “To be clear, we intend to explore all avenues that are available to us.”
Asked about the meeting, USPS spokesperson Kim Frum said she has “no information I am able to share at this time.”
The USPS announced the new truck last week after a yearslong bidding process that saw multiple manufacturers from around the world build and pitch prototypes in hopes of winning the contract, which could ultimately be worth billions of dollars. A new mail vehicle is desperately needed, as the current trucks — which were built by defense contractor Grumman — are being stretched past their expected expiration date, which is costing the agency a fortune. Many trucks have even caught fire. They also don’t have modern features like air conditioning or airbags.
“This is not the result we had anticipated or hoped for.”
Oshkosh’s mail truck addresses many of these problems. But following last week’s announcement, Postmaster General Louis DeJoy told Congress that only 10 percent of the new mail trucks built by Oshkosh will be electric. Oshkosh and the USPS claim the vehicles will be designed to be converted from gas to electric power at a later date but didn’t offer any projections about how much that will cost, who will pay for it, or any other information about this part of the plan.
Workhorse doesn’t have much of a track record to date when it comes to execution, though UPS is one of the companies that has ordered its vehicles. And its chance of winning the bid seemed to improve early this year when President Biden signed an executive order directing federal officials to come up with a way to switch over the entire government fleet to electric vehicles. (The USPS mail vehicles make up about a third of the more than 600,000 vehicles in the government fleet.)
Hughes said on the call that he believes Biden’s decision to add new governors to the board that oversees the USPS is part of an effort to unseat DeJoy and to further support the push to electrify the mail fleet.
Regardless of the outcome of the meeting with the USPS, Hughes and Workhorse CFO Steve Schrader spent much of Monday’s call reassuring investors that the startup has a path forward without the contract.
“I’ve always said this: with or without the Post Office, we have a business here, and we have to focus on being able to build that business,” Hughes said, though he acknowledged the mail truck contract would have been a “game-changer.”
Workhorse raised a ton of money in 2020
To that end, 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 that backlog. The startup logged just $1.4 million in sales in 2020, with $652,000 of that coming in the final quarter of the year. The cost of those 2020 sales was some $13 million, too, since Workhorse’s output was so low for the year as it dealt with a COVID-19 outbreak at its Ohio facility.
Schrader said Workhorse is trying to scale up to making as many as three trucks per day this month, with the goal of making 10 per day by the end of June. Reaching a production output of 200 trucks per month would let Workhorse break even, Schrader said.
Workhorse has bled money for years but was able to survive thanks to loans from hedge funds and by selling off parts of its business. The best example of that is Lordstown Motors, an electric pickup truck startup created by former Workhorse CEO (and founder) Steve Burns. Workhorse basically handed over the intellectual property (and order book) for a pickup truck it had developed to Lordstown Motors in exchange for a 1-percent slice of any funding the new startup raised, a royalty on the first 200,000 vehicles sold, and a 10-percent ownership stake.
That ownership stake is now worth around $330 million, according to Workhorse’s latest financial report filed Monday. Lordstown Motors also went public in late 2020, and so Workhorse ultimately netted $4.8 million as a result of the accompanying funding round.
That’s in addition to some $270 million of separate funding that Workhorse locked down in 2020.
“Needless to say it’s been an incredible year for us,” Hughes said.