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Earlier this month, President Trump tweeted that GM would be selling its shuttered Lordstown, Ohio plant to electric truck maker Workhorse. But a new report on the subject of what's happening at Workhorse, casting doubt on both the deal and the company itself.
While Trump's tweet seemed to frame the agreement as a formality, a subsequent press release of GM was noted in the carmaker was "in discussions" with Workhorse and "an affiliated, newly formed entity."
That entity, headed by Workhorse founder Steve Burns, "is almost entirely on paper," The New York Times reports. The unnamed entity would need at least $ 300 million to get the Lordstown plan back up and running.
"It's a gargantuan task" when it comes to raising money, Burns told the Times. "There is no going away from it."
Adding to that task, Workhorse reportedly only had $ 3 million in cash, the end of March, and the company, which the Times refers to "barely hanging on," looks to be in dire need of new investments:
Between its founding in 2007 and the first quarter of 2019, Workhorse lost nearly $ 150 million. It has produced a total of 365 vehicles since its inception, less than Lordstown can churn out in a day. Last year, Workhorse's revenue totaled $ 763,000, about $ 62,000 less than the combined salaries of its top three executives.
Workhorse sold 1,000 electric vans to UPS last year, but the company has an even bigger opportunity as a finalist to supply delivery trucks to the USPS. That contract is worth an estimated $ 6.3 billion.
Even though it may be tough, however, the Times notes that in a recent filing, "Workhorse said it needed $ 22 million to make vehicles for UPS, DHL and other customers."
Workhorse has received a $ 35 million line of credit for Marathon, however, which should give the company some time, and should cover for those orders.
Commercial customers also seem to be satisfied. Workhorse has sold vehicles to Ryder and Chris Nordh, senior director for advanced vehicle technologies at Ryder, told the Times:
"Their products have really performed well. I do not have a problem with the trucks. "
GM and Workhorse both appearing on the way to complete the deal, but not everyone is as optimistic. Stephen Baksa, a major Workhorse shareholder, said Burns has been unchallenged. That includes an electric helicopter called SureFly. Workhorse's website also showcases a drone delivery system called HorseFly.
Baksa told the Times, "I have watched this comedy act evolve, but the time has finally come for these guys."
Workhorse also unveiled a plug-in hybrid pickup truck in 2017.
Electrek's Take
It's never easy, and Workhorse really seems to be against it right now. On the first word of the GM deal, we suspected the company would need a lot of help to make it happen. Needing at least $ 300 million to start a new venture, while the company is in need of funding to complete its existing orders … it's not an ideal situation, to say the least.
However, we're not willing to write an obituary based on one report. It's a matter of funding, and it's all about the right partner. Both GM and Workhorse pointed to Rivian as an example of what can happen. Perhaps Workhorse will find an investor that can give the company the boost it needs. (GM)
It's also worth nothing that can not be overlooked.
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