Availability of subsidies for electric vehicles is proving to be a revenue generator for EV startup Workhorse Group, which said in its second-quarter earnings report on Aug. 8 that it will generate $65 million to $85 million this year. The company credited vouchers for its vehicles in California and a 45-day delay in its new medium-duty W56 production that will reduce costs.
“Based on improved clarity gained from the emerging commercial EV market experience in the first half of the year, Workhorse now expects to generate between $65 [million and] $85 million in revenue for calendar year 2023 due primarily to two factors: the availability of HVIP vouchers through GreenPower Motor Co. for the W4 CC and W750 vehicles in the California market as well as longer than expected certification testing, which may delay the W56 production launch by approximately 45 days,” the company said in guidance issued with the earnings report.
CFO Bob Ginnan added: “The Workhorse team is ramping up production and deliveries for our products while taking steps to expand our dealer network and ensure we have the financial resources to achieve our strategic goals. We have built a strong foundation in all areas of our business and are confident in our ability to deliver continued revenue growth and enhanced shareholder value in the near term.”
Raw Q2 results show the EV maker starting to pick up momentum after financial and other difficulties in 2022 and 2021.
Gross sales for the quarter were $6.4 million, less a $2.4 million allowance for potential Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) impact in California while the environmental regulating authority there, the California Air Resources Board, finalizes Workhorse’s HVIP eligibility. Sales, net of returns and allowances for Q2, were $4 million compared to nothing in the same period last year. The increase in sales is primarily due to sales volume of the W4 CC vehicle in the current period, the company reported on Aug. 8.
The cost of sales increased to $8.4 million in the second quarter from $3 million in the same period last year, primarily due to a $4.8 million increase in costs related to vehicle sales and a $600,000 increase in employee compensation and related expenses.
Selling, general, and administrative expenses increased to $14 million in Q2 from $13 million during the second quarter of 2022. The increase was primarily driven by a $500,000 rise in employee compensation and related expenses, including non-cash stock-based compensation expense, a $400,000 increase in professional services, and a $500,000 rise in other operational costs, the company said.
R&D cost the company about what it did during Q2 2022, around $5 million, Workhorse also reported.
As of June 30, Workhorse had about $62.4 million in cash and cash equivalents.
“Our second-quarter performance demonstrates the ongoing progress we are making on our path forward to grow and further position Workhorse for success,” CEO Rick Dauch added. “During the quarter, we continued to advance our product roadmaps, ramp up production, and expand our commercial relationships. We were pleased to increase production and delivery of our W4 CC vehicles and delivered our first W750 to a customer. The W56 program is also on track to begin production in the third quarter of this year.”
Workhorse, according to the company statement, delivered on these operational priorities in the second quarter:
- Received purchase orders for 62 vehicles, including the first two orders for the new W56, and delivered 42 Class 4 vehicles (W4 CC/W750) to customers as Workhorse expands its dealer network.
- Conducted several customer EV demonstrations, including a full-day field test of the W750 with the City of Los Angeles, and showcased the W56 at CALSTART’s electric vehicle event in Washington, D.C., highlighting Workhorse’s family of last-mile delivery vehicles.
- Established Burr Truck and Trailer Sales as the first certified Workhorse dealer in New York state and the Northeast region of the country.
- Established EVC/Smyrna Truck as Workhorse’s first certified EV dealer and bodybuilder in Georgia.
- Western Truck Exchange was also added as a certified Workhorse dealer, expanding the company’s existing California presence to the L.A. metro area.