Commercial electric truck manufacturer Workhorse has cut 20% of its staff and is working to shore up funding to maintain operations amid market challenges.
Workhorse faces concerns about its ability to continue without successfully improving liquidity and working capital requirements over the next 12 months, according to the company’s 10-K filing today. The potential financing arrangement is expected to carry a higher capital cost than Workhorse’s current arrangements.
The OEM is negotiating with multiple financiers and plans to close a transaction “in the near future” to build necessary liquidity, Chief Executive Rick Dauch said during today’s earnings call.
“We’re in the process of completing negotiations on a financing transaction,” he said. “That along with our pending [Union City, Ind. plant] sale/leaseback transaction and aggressive -cutting actions we are taking position our business to have the financial runway necessary to execute on our business plan.”
So far during the first quarter of 2024, Workhorse cut staff and executive officers agreed to defer 20% of their cash compensation for at least three months, according to the 10-K. The company is also transitioning its drone business away from manufacturing to drones-as-a-service.
“We are working hard to resolve short-term liquidity issues,” Bob Ginnan, chief financial officer, said on the call.
Workhorse sales totaled $4.4 million in the fourth quarter ended Dec. 31, 2023, up compared with $3.4 million a year prior, according to the OEM’s earnings release today. Still, the company’s net loss increased 17.1% year over year to $45.3 million. The manufacturer had $25.8 million in cash and cash equivalents in Q4 along with a restricted cash balance of $10 million.
For the full year, Workhorse sales jumped to $13.1 million compared with $5 million in 2022, driven in part by new product launches. Net loss ticked up 5.6% YoY to $123.9 million in 2023.
The OEM isn’t the only EV manufacturer facing cost challenges. Fisker is in negotiations with Nissan Motor Co. for an influx of cash as the EV maker faces liquidity challenges and plans to cut 15% of its workforce.
The issues plaguing EV companies rise largely from slowing growth and mixed demand, with slowed sales also prompting a wave of price cuts and incentives across the industry. EV sales rose 40% YoY in Q4, a slower rate compared with increases of 49% YoY in Q3 and 52% YoY in Q4 2022, according to Cox Automotive.
Shares of Workhorse Group Inc. [Nasdaq: WKHS] down 12.8% from market open at $0.28 as of market close today. Workhorse has a market capitalization of $71 million.
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This story first appeared on Auto Finance News, a publication of Royal Media.
