Workhorse Group suspends deliveries of C-1000 vehicles, recalls 41 that it had delivered
Workhorse Group Inc. (WKHS) shares plunged on Wednesday to their lowest in fifteen months after the beleaguered electric-vehicle maker said it will suspend deliveries of its vans and recall units it has already delivered.
Workhorse Group (WKHS) provided an update to its ongoing review of the Company’s business and go-forward operating and commercial plans to transition from an advanced technology start-up to an efficient manufacturing company.
The electric van, called the C-1000, would require additional testing and modifications to existing vehicles in order to certify them under federal motor vehicle safety standards, the company said in a statement.
The Company has identified a number of enhancements in the production process and design of the C-1000 to address customer feedback, primarily related to vehicle dynamics to increase the vehicles’ payload capacity.
As Workhorse has identified these enhancements and continued its review and redesign of the C-1000, the Company has decided to suspend deliveries of C-1000 vehicles and recall 41 vehicles it has already delivered.
As part of these efforts, the new leadership team has determined that additional testing and modifications to existing vehicles are required to certify the C-1000 vehicles under Federal Motor Vehicle Safety Standard.
The Company expects to complete testing in the fourth quarter of 2021.
Workhorse intends to provide an update on its operating and commercial plans on its upcoming third quarter 2021 earnings call.
The Company has filed a report with the National Highway Traffic Safety Administration regarding the need for additional testing and vehicle modifications to certify its C-1000 vehicles under FMVSS, and intends to fully coordinate with NHTSA.
The Company has not received any customer reports of safety issues related to this matter in any of the C-1000 vehicles previously delivered by Workhorse.
Additional details will be available in the Company’s filing with NHTSA.
Accordingly, the Company’s previous statements related to the C-1000’s compliance with NHTSA standards cannot be relied upon and the Company has so notified the Securities and Exchange Commission.
#Cowen analyst Jeffrey #Osborne lowered his price target on the company to $7.50 from $8.50, and also reduced his estimates for 2021 and 2022 after the announcement, saying a “turnaround appears more challenging.” The analyst also expects working capital to likely be challenged due to prepayments for batteries and other critical materials.
According to some reports, the company is being investigated by the U.S. Securities and Exchange Commission, as well as disappointment related to losing out on a U.S. Postal Service contract that many had expected Workhorse to win.
WKHS closed at $7.41. Shares have a 52-week high of $42.96.
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