Workhorse Group posts big loss on electric vans

Workhorse Group, a small producer of electric vans that was investigated by federal authorities on Tuesday declared a loss of $ 81 milli...

Workhorse Group, a small producer of electric vans that was investigated by federal authorities on Tuesday declared a loss of $ 81 million for the three months ending in September due to increased operating costs and a production shutdown related to a recall.

The company also reported negative revenue of $ 576,600 as it had to reimburse customers for vans it was required to take back and modify in order to comply with federal safety standards.

Workhorse said in a regulatory filing Monday that it was under investigation by the Securities and Exchange Commission and the Department of Justice. The SEC investigation is linked to trading in Workhorse shares ahead of the February announcement that it had failed to win a major US Postal Service contract, a development that caused a sharp drop in Workhorse shares.

Of the Justice Department’s investigation, Workhorse only said it was “related”.

“We have not received any subpoenas or other requests for further documentation from DOJ regarding this investigation,” Workhorse chief executive Rick Dauch said in a conference call with financial analysts after the results were announced Tuesday. “At this point, we cannot predict the scope, duration or eventual outcome of these issues.”

He said Workhorse was cooperating with the SEC and the Department of Justice.

Although small, Workhorse rose to prominence in 2019 when its founder, Steve Burns, agreed to buy an auto plant in Lordstown, Ohio, which had been slowed down by General Motors, and President Donald J. Trump praised the deal on Twitter. Mr. Burns then left Workhorse and formed Lordstown Motors and planned to use the factory to produce an electric pickup truck.

Lordstown struggled to put his truck into production and is himself facing investigations into its activities by the SEC and the Department of Justice.

On the conference call, Dauch said Workhorse was trying to decide whether to continue producing the C-1000 electric van, which he hoped to sell to shipping companies like Federal Express and UPS. He said the design was “not robust and it was not cost effective”.

Workhorse sold 41 vans this year before they finished ensuring the C-1000’s design met federal safety standards. The company suspended sales until testing was completed, resumed all 41 vehicles, and slowed production to two trucks per week.

Mr Dauch also said Workhorse was trying to plan what vans it could produce in the future. “We are a real company,” he said.

Workhorse stock closed at $ 6.64 on Tuesday afternoon, down 3.6%. Since the beginning of February, stocks have fallen by more than 80%.

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Newsrust - US Top News: Workhorse Group posts big loss on electric vans
Workhorse Group posts big loss on electric vans
Newsrust - US Top News
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