Commercial EV startup Workhorse will have a “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 trucks. Workhorse was the bidder’s last remaining bid 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 expected or expected,” said CEO Duane Hughes in a conference call on Monday morning after the release of Workhorses’ financial results for 2020. “To be clear, we intend to explore all the avenues that are available for us . “
Asked about the meeting, USPS spokesman Kim Frum said that she “has no information that I can share at the moment.”
The USPS announced the new truck last week, after a years-long bidding process that saw several manufacturers around the world build and launch prototypes in hopes of winning the bill, which could be worth billions of dollars. A new courier vehicle is desperately needed, as the current trucks – which were built by defense contractor Grumman – are being stretched after their expected expiration date, which is costing the agency a fortune. Many trucks even caught fire. They also lack modern features, such as air conditioning or airbags.
Oshkosh’s mail truck solves many of these problems. But after last week’s announcement, Postmaster General Louis DeJoy told Congress that only 10 percent of new mail trucks built by Oshkosh will be electric. Oshkosh and the USPS say the vehicles will be designed to convert from gas to electricity at a later date, but have offered no projection of how much it will cost, who will pay for it or any other information about this part of the plan.
Workhorse does not have much track record of execution so far, although UPS is one of the companies that ordered its vehicles. And his chance of winning the bid appeared to improve earlier this year, when President Biden signed an executive order ordering federal officials to find a way to replace the entire government fleet with electric vehicles. (USPS courier vehicles represent 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 drive to electrify the mail fleet.
Regardless of the outcome of the meeting with the USPS, Hughes and Workhorse CFO Steve Schrader, they spent much of the call on Monday assuring investors that the startup has a way to go without the contract.
“I always said that: with or without the Post Office, we have a business here and we have to focus on being able to build that business,” said Hughes, although he acknowledged that the mail truck contract would have been a “challenging player.”
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 with that portfolio. The startup recorded only $ 1.4 million in sales in 2020, with $ 652,000 of that coming in the last quarter of the year. The cost of these 2020 sales was about $ 13 million, too, since Workhorse’s production was so low this year as it handled a COVID-19 outbreak at its Ohio facility.
Schrader said Workhorse is trying to grow to make up to three trucks a day this month, with the goal of making 10 trucks a day by the end of June. Achieving production of 200 trucks per month would make Workhorse balanced, said Schrader.
Workhorse bled money for years, but managed to survive thanks to loans from hedge funds and the sale of parts of his business. The best example of this is Lordstown Motors, an electric pickup startup created by former Workhorse CEO (and founder) Steve Burns. Workhorse basically handed over the intellectual property (and order book) of a pickup truck he had developed for Lordstown Motors in exchange for a 1 percent slice of any financing the new startup raised, a royalty on the first 200,000 vehicles sold and a 10 – percent shareholding.
That stake is now worth about $ 330 million, according to Workhorse’s latest financial report filed Monday. Lordstown Motors also went public in late 2020, so Workhorse finally raised $ 4.8 million as a result of the accompanying round of financing.
That and about $ 270 million of separate funding that Workhorse blocked in 2020.
“Needless to say, it was an incredible year for us,” said Hughes.