Workhorse electric vans cleared for Canada market entry

CINCINNATI - Workhorse Group Inc. (NASDAQ: NASDAQ:WKHS), an American technology company specializing in zero-emission commercial vehicles, has received approval to import and sell two models of its all-electric step vans in Canada. The company, currently valued at $19 million and trading near its 52-week low of $0.46, faces significant operational challenges according to InvestingPro analysis, which shows a weak overall financial health score of 1.43 out of 5. The W56 and W750 models have been cleared for the Canadian market through the Appendix G Pre-clearance Program of Transport Canada, which confirmed the vehicles’ compliance with the Canadian Motor Vehicle Safety Standards (CMVSS).

This development is a significant expansion for Workhorse as it aims to meet the growing demand for sustainable transportation solutions in Canada. The company’s entry into the Canadian market aligns with the country’s goals to achieve net-zero emissions and adopt clean transportation methods. However, InvestingPro data reveals the company faces challenges with revenue declining 25% in the last twelve months and rapid cash burn, making this expansion crucial for future growth. InvestingPro subscribers have access to over 20 additional insights about Workhorse’s financial position. Workhorse’s electric step vans are designed to assist businesses in transitioning to zero-emission fleets.

Workhorse has reported a strong interest from Canadian last-mile delivery fleets and is preparing for on-road testing of demo trucks, which is scheduled to begin no later than the second quarter of 2025. These tests will showcase the electric vans’ capabilities in real-world conditions.

Josh Anderson, Workhorse’s Chief Technology Officer, commented on the milestone, highlighting the importance of the Canadian market for the company’s growth and the opportunity to serve fleets operating across North American borders.

The certification of the W56 and W750 models positions Workhouse to make a seamless entry into the Canadian market, offering proven performance, operational efficiency, and a robust service and support network. While current market valuation suggests the stock may be undervalued according to InvestingPro Fair Value metrics, investors should note the company’s significant debt burden of $20.8 million and negative EBITDA of -$85.1 million in the last twelve months. For detailed analysis and comprehensive insights, access the full Pro Research Report available for Workhorse and 1,400+ other US stocks on InvestingPro. The company is also exploring opportunities to expand its dealer network across Canada to better serve its customers.

Workhorse Group designs and manufactures its vehicles in the United States and is known for its range of vehicles suited for last-mile delivery, medium-duty operations, and specialized applications.

This expansion into Canada is based on a press release statement from Workhorse Group Inc. and reflects the company’s current expectations and market opportunities, subject to risks and uncertainties inherent in forward-looking statements.

In other recent news, Workhorse Group Inc. has secured a significant $35 million in financing through a securities purchase agreement with an institutional investor. This transaction is part of a broader financing strategy that could reach up to $139 million, providing the company with crucial capital for its operations. Additionally, Workhorse has entered into another agreement to issue $3.5 million in senior secured convertible notes, further bolstering its financial position. These notes carry a 9% annual interest rate and are convertible into common stock, with certain conditions to prevent excessive ownership concentration.

The company has recently changed its independent registered public accounting firm for the fiscal year ending December 31, 2024, appointing Berkowitz Pollack Brant Advisors + CPAs, LLP. This change follows the decision of Grant Thornton LLP not to stand for reappointment amid financial concerns, including doubts about Workhorse’s ability to continue as a going concern. Despite these concerns, there were no disagreements on accounting principles or practices with the former auditor.

Workhorse Group is also evaluating the need for an additional reserve related to its W4 CC trucks, which might result in a reserve of between $1.5 million and $1.8 million. This move is part of the company’s ongoing strategy to manage its financial health and operations in the competitive electric vehicle market. Investors should be aware that the issuance of convertible notes and potential stock conversion could lead to dilution of existing shares, although measures are in place to limit this impact.

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