Is Workhorse still in the game? Lawmakers investigate Oshkosh trades, introduce bill to fund US Postal Service electrification

March 10, 2021 by admin 45 Comments

EV advocates (and investors in WKHS stock) were shocked and disappointed by the US Postal Service’s recent decision to award a 10-year contract to Wisconsin-based Oshkosh Defense to manufacture a new generation of postal delivery vehicles.

The Workhorse Group, which specializes in EVs designed for last-mile delivery, and counts UPS and FedEx Express among its customers, had been considered a shoo-in for the contract. The decision to give the deal to Oshkosh, which specializes in military vehicles and (to the best of our knowledge) has never built an EV, came as a surprise to most followers of the issue.

The news soon got worse: USPS CEO Louis DeJoy, an ardent supporter of former president Trump, announced that only 10% of the next-generation fleet would consist of EVs. This was seen as a poke in the eye of President Biden, who has called for the federal government to fully electrify its vehicle fleet, and some speculated that a political payback was in play.

Now a couple of new developments have raised hopes that the Postal Service’s fossil-friendly decision could be reversed, or at least mitigated (hopes aren’t all that have been raised—WKHS shares, after shedding more than half their value on news of the Oshkosh award, have recovered a substantial chunk of that loss).

US Representative Tim Ryan (D-Ohio) and members of the House Oversight Committee have raised questions about a fishy trade in Oshkosh stock. Some undetermined person or persons bought $54.2 million worth of shares in after-hours trading ahead of the announcement of the company’s surprise contract win—almost as much as the entire average daily volume in the stock in the prior year, according to Bloomberg.

“It definitely stinks and needs to be looked into at the highest levels,” Ryan told Bloomberg. “If that is not suspicious, I don’t know what is. Somebody clearly knew something.” Ryan said he will ask the Securities and Exchange Commission to investigate. He has joined with a couple of other Ohio lawmakers to call for the Biden administration to “delay the contract until a thorough review is conducted.”

Meanwhile, a group of 17 House Democrats have introduced legislation to provide $6 billion to the USPS to purchase new vehicles. Reuters reports that the bill would require at least 75% of the new fleet to be electric or zero-emission vehicles (it does not specify a manufacturer).

A USPS spokesperson indicated that the agency would be open to such a deal (one of the justifications cited for not going with 100% EVs was that it would cost too much). “We welcome and are interested in any support from Congress that advances the goal of a Postal Service vehicle fleet with zero emissions, and the necessary infrastructure required to operate it,” said the spokesperson. “With the right level of support, the majority of the Postal Service’s fleet can be electric by the end of the decade.”

Sources: Bloomberg, Reuters