Workhorse Group, a small producer of electric vans that has come under investigation by federal authorities, on Tuesday reported a loss of $81 million for the three months ending in September as a result of rising operating costs and a production stoppage related to a recall.
The company also reported negative revenue of $576,600 because it had to give customers refunds for vans that it was required to take back and modify in order to comply with federal safety standards.
Workhorse said in a regulatory filing on Monday that it was being investigated by the Securities and Exchange Commission and the Justice Department. The S.E.C. inquiry is related to trading in Workhorse stock before the announcement in February that it had failed to win a large contract from the United States Postal Service, a development that caused a steep drop in Workhorse shares.
Of the Justice Department’s investigation, Workhorse said only that it was “related.”
“We have not received any subpoena or other request for further documents from the D.O.J. with respect to this investigation,” Workhorse’s chief executive, Rick Dauch, said on a conference call with financial analysts after the earnings announcement on Tuesday. “At this point, we cannot predict the eventual scope, duration or outcome of these matters.”
He said Workhorse was cooperating with both the S.E.C. and the Justice Department.
Although it is small, Workhorse gained prominence in 2019 when its founder, Steve Burns, agreed to buy an auto plant in Lordstown, Ohio, that had been idled by General Motors, and President Donald J. Trump lauded the deal on Twitter. Mr. Burns then left Workhorse and formed Lordstown Motors, and planned to use the plant to produce an electric pickup truck.
Lordstown has struggled to put its truck into production and is itself facing investigations into its business by the S.E.C. and the Justice Department.
On the conference call, Mr. Dauch said Workhorse was trying to decide whether to continue producing the C-1000 electric van, which it had hoped to sell to shipping companies like Federal Express and UPS. He said the design was “not robust nor is it profitable.”
Workhorse sold 41 of the vans this year before it had finished making sure the C-1000 design complied with federal safety standards. The company suspended further sales until the testing was complete, took back the 41 vehicles and has slowed production to two trucks a week.
Mr. Dauch also said Workhorse was trying to plan what vans it could produce in the future. “We are a real company,” he said.
Workhorse’s stock ended trading at $6.64 on Tuesday afternoon, down 3.6 percent. Since early February, the shares have fallen more than 80 percent.
Source: NY Times