- Workhorse stock extended its two-day slide to 57% on Wednesday after losing a coveted USPS contract to Oshkosh Defense.
- The electric vehicle maker was a front runner for the ten-year, multi-billion dollar USPS contract to modernize the delivery fleet.
- Oshkosh received $482 million in the first part of the deal and expects to assemble 50,000 to 165,000 vehicles over the contract period.
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Workhorse extended its two-day slide to 57% on Wednesday after losing a coveted US Postal Service contract to Oshkosh Defense.
The company’s stock fell over 50% amid increased volatility after the news on Tuesday, triggering multiple trading halts before the stock recovered slightly, ending the day 47.5% lower.
The USPS awarded Oshkosh Defense the first part of a 10-year, multi-billion dollar contract to modernize the postal delivery fleet. An initial investment of $482 million will help finalize the design of the new vehicles for mail and package delivery, and allow Oshkosh to assemble 50,000-165,000 vehicles over the contract period.
The USPS made the agreement an indefinite-delivery, indefinite-quantity (IDIQ) contract, meaning that after an initial dollar commitment, the Postal Service will be able to order more vehicles throughout the 10-year contract period.
According to Bloomberg Intelligence analyst Christopher Ciolino, the total contract could be worth more than $5.7 billion in revenue for Oshkosh.
The USPS had been looking for a partner to help modernize its fleet of postal vehicles since 2015, but when Rep. Jared Huffman (D-CA) introduced the Federal Leadership in Energy Efficient Transportation Act in 2019 the postal service finally had the backing to narrow in on a deal.
For a time, the electric vehicle maker Workhorse was thought to be a leader in the competition for the lucrative contract. The USPS commissioned five prototype postal service vehicles and Workhorse partnered with truck builder VT Hackney to produce their own.
Analysts at BTIG said they saw Workhorse securing a portion of the USPS contract as a part of their base case scenario and held a “buy” rating on the company, per CNBC.
But now Oshkosh has secured the contract to make both fuel-efficient internal combustion engines and some battery-electric powertrains for USPS, leaving the pre-revenue EV startup Workhorse in a difficult spot.
In October of last year, short-seller Fuzzy Panda Research alleged that Workhorse destroyed its chances of landing the USPS contract.
According to the short-seller, there were numerous failures including suspension issues, motor outages, and even a parking brake malfunction that led to a postal worker injury.
Workhorse stock was down 9.14% as of 8:44 a.m. ET on Wednesday.