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Ohio-based startup Workhorse said it needed to redesign its flagship electric pickup truck to meet customer needs, after finally putting the vehicle into production in the last quarter after years of struggles.
The company announced Monday morning that it had to “revise the design [of] the vehicle ”to increase the payload capacity, which would be approximately 6,000 pounds. The C-1000 minivan, as it’s called, has 1,000 cubic feet of cargo space. The company says the electric powertrain will remain intact and will continue to deliver C-1000s as they roll off the line to customers who are okay with the pickup’s current capabilities.
“We will go through full vehicle design to BOM reviews with our engineering team and our purchasing team,” CEO Rick Dauch said on a call with investors. Dauch, who just joined Workhorse at the end of July, said the company was aware of these “problems” with the C-1000 “long before I got here.” He vowed to release a revamped product roadmap by November, but said he “cannot commit to having all design plans specifically finalized” by then.
Dauch, who was from automotive supplier Delphi, tried to calm nerves by teasing a recent call with one of the company’s potential customers, who he said wanted to place an order for 1,500 to 2,000 vans as is. . “I said wait for now, refine the designs, optimize our production, and we’ll come back to tell you when we’re ready to place these orders,” he told the customer.
Dauch replaced former CEO Duane Hughes in a series of executive shifts at Workhorse following the loss of the next-generation delivery vehicle construction offer for the US Postal Service (USPS). The contract was awarded to defense products maker Oshkosh in February, although Workhorse is currently challenging the decision in federal court.
The decision to redesign the C-1000 van comes at a crucial time for Workhorse. The startup has spent years trying to be the first to come up with a fully electric delivery van, and has caught the attention of big-name customers like UPS and Ryder. But he struggled to get the van (and its successor, a 650 cubic foot variant) ready for production. And as the USPS competition dragged on, it survived for a while on money borrowed from hedge funds.
In early 2019, Workhorse licensed the intellectual property of an electric pickup truck under development to a new startup called Lordstown Motors, founded by Hughes’ predecessor Steve Burns. In return, Workhorse received a 10 percent stake in Lordstown Motors as well as millions of dollars in license fees and royalties.
Lordstown Motors went public in a merger with a specialist acquisition company late last year, and the value of Workhorse’s stake briefly climbed to around $ 330 million. But Burns has since been accused of rigging and lying about the number of preorders for Lordstown Motors’ electric pickup and was ousted from the company in June. Lordstown Motors now faces several federal inquiries and has had to narrow the scope of its own plans to go into production.
With that in mind, Workhorse also announced on Monday that it had recently sold 72 percent of its stake in Lordstown Motors to increase its cash reserves. (The company ended the quarter with $ 156 million in the bank, although it lost $ 183 million in the first half of 2021.) As Lordstown Motors’ stock price fell amid the difficulties of the startup, Workhorse said the sale is only expected to bring in around $ 79 million.
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