Workhorse Group Q2 2026 Earnings Report

Workhorse Group EPS Results

• Actual EPS: -$1.86
• Consensus EPS: -$0.95
• Beat/Miss: Missed by -$0.91
• One Year Ago EPS: N/A

Workhorse Group Revenue Results

• Actual Revenue: $3.56 million
• Expected Revenue: $5.33 million
• Beat/Miss: Missed by -$1.76 million
• YoY Revenue Growth: N/A

Workhorse Group Announcement Details

• Quarter: Q2 2026
• Date: 8/13/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 4:30PM ET

Workhorse Group (NASDAQ:WKHS) Inc. is an American technology company that develops zero-emission commercial vehicles and related solutions for last-mile delivery and other fleet applications. The company focuses primarily on battery-electric delivery vehicles designed to help businesses reduce operating emissions and improve delivery efficiency.

Workhorse’s product portfolio has included the W56 electric step van and the W4 CC electric chassis cab, which are intended for commercial, vocational and delivery fleets. The company has also developed supporting technologies, including telematics and HorseFly, an autonomous delivery system designed to work with its vehicles and drones.

Founded in 2007 as AMP Electric Vehicles, the company adopted the Workhorse Group name in 2015. It is headquartered in Sharonville, Ohio, and primarily serves commercial fleet operators in the United States through direct sales, partnerships and fleet-focused distribution channels.

Workhorse Group Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Workhorse expects a meaningful increase in deliveries during the second half of 2026, supported by 100-vehicle orders each from Purolator and Gateway Fleets, as well as additional customer purchase orders. Its sales pipeline has more than doubled since the start of the year.
• Positive Sentiment: The company remains on track to achieve a $20 million annualized cost-synergy run rate by the end of 2026 following the Workhorse-Motiv merger, while pursuing further bill-of-materials reductions and a modular vehicle platform.
• Neutral Sentiment: Workhorse plans to enter the mobile AI data-center market, targeting prototype development and partnerships over the next 10–12 months, with production and commercial deliveries targeted for 2027. Management views the opportunity as a potentially significant, capital-efficient growth area, but it remains early-stage and speculative.
• Negative Sentiment: Q2 revenue was $3.6 million and the company delivered 26 vehicles, below the prior-year pro forma comparison of $6.4 million and 39 vehicles; gross loss was $7.5 million and net loss reached $20.2 million. Workhorse ended the quarter with only $9.6 million in cash and said just $1.7 million remained available under its credit agreements after additional borrowing.

Presentation

[Operator]

Afternoon, and thank you for joining today's call. Welcome to Workhorse Group Q2 2026 earnings call. Currently, all participants are in listen-only mode. A question and answer session will follow the formal presentation. Please be advised that today's conference is being recorded. I will now turn the call over to John Williams, Chief Communications Officer. Mr. Williams, please go ahead.

[John Williams, Chief Communications Officer at Workhorse Group]

Thank you, operator, and good afternoon, everyone. I would like to welcome all of you to Workhorse's second quarter 2026 earnings call. Please note that we have posted our results for the second quarter ended June 30, 2026, via press release and 8-K, and filed our associated quarterly report on Form 10-Q with the SEC. You can find the release and an accompanying presentation in the investor relations section of our website. We will be tracking along with the presentation during this call. Before we get to the quarter, one framing point. While Workhorse and Motiv came together in December 2025, what came out of the merger is, in practice, a different company than the one that many of you have followed for years. A new management team, new operating platform, and a new strategy.

[John Williams, Chief Communications Officer at Workhorse Group]

We look forward to sharing more about the new Workhorse today, as well as reporting on our progress each quarter. Joining me on today's call are Scott Griffith, our Chief Executive Officer, and Jody Davis, our Chief Financial Officer, who joined Workhorse in July. For today's agenda, please turn to slide three. Following my opening remarks, I will hand it over to Scott, who will provide an update on our operational and commercial progress and the strategic priorities we are focused on, including our recently announced planned entry into the mobile AI data center category. Jody will then walk us through our financial results for the quarter and our capital position. Scott will then make closing remarks before we open the call for questions. Our cautionary language can be found on slide four.

[John Williams, Chief Communications Officer at Workhorse Group]

The comments that will be made today include forward-looking statements, which are based on current expectations and projections about future events. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Additional information regarding these risks and uncertainties can be found in today's press release and in our filings with the SEC, including our Form 10-K and Form 10-Q. Now, I will turn it over to Scott.

[Scott Griffith, CEO at Workhorse Group]

Thanks, John. Good afternoon, everyone, and thank you for joining us. As we complete the final stages of merger integration, Workhorse is transforming from a pure-play manufacturer of electric commercial vehicles into a new American industrial technology company built to serve critical commercial, government, defense, and infrastructure markets. At the heart of this transformation is our foundational expertise in the design, engineering, testing, validation, and manufacturing of industrial products. While traditionally, this expertise has been applied to the commercial vehicle market, we believe we are positioned to leverage it for broader industrial applications, opening up access to additional large, high-growth markets. We continue to innovate and deliver leading software-defined medium-duty commercial electric trucks that outperform incumbents on total cost of ownership. However, we are still in the early stages of market adoption, and broader commercial electric truck adoption will ultimately depend on delivering a clearly superior economic value proposition.

[Scott Griffith, CEO at Workhorse Group]

That is the key to capture a meaningful share of the $23 billion annual medium-duty truck market and realize our full potential. In a few minutes, I will provide you with an update and details about our overall progress to reduce costs, broaden our product portfolio, and build the backlog into 2027. In July, we announced an important step in advancing our new industrial technology vision with our planned entry into the emerging mobile data center market. We announced plans to develop a turnkey, compute-ready, containerized mobile AI data center designed to meet the localized mobile AI infrastructure needs of distributed deployment applications worldwide. This new market is still in its early stages, and we believe our engineering and manufacturing expertise position us well to compete as it develops. I will provide more detail on this development during our call today.

[Scott Griffith, CEO at Workhorse Group]

All of our products are designed, engineered, tested, and validated by our technology development team and will be manufactured at the Workhorse Manufacturing Center in Union City, Indiana. We believe our ability to compete and win in these markets will be driven by the complementary capabilities brought together by the Workhorse Motiv merger, our software, hardware, engineering, and product design capabilities, our commercial-scale facility and its lean manufacturing processes, our established customer base comprised of many blue-chip companies, the technology and manufacturing foundation built on approximately $800 million of historical investment across Workhorse and Motiv, and an experienced management team with strategic vision, agility, and a track record of execution. I couldn't be more excited by where we stand at Workhorse today. Let me explain why. First, we continue to deliver on our stated integration plan.

[Scott Griffith, CEO at Workhorse Group]

We have continued the process of integrating various enterprise technology systems and reducing redundancies across facilities and personnel. This is a complex process, and I am pleased with the progress we have made. Based on our progress, we continue to believe we are on track to achieve our previously communicated $20 million of annualized cost synergy run rate by the end of 2026. Jody will walk you through the numbers in more detail, but I will note that our operating expenses declined sequentially in the quarter even as production increased. We believe this trend is consistent with the operating leverage we expected to realize as we continue the integration. It is also important to recognize that these integration efforts extend beyond cost reduction. These efforts are also about optimizing the organization for growth.

[Scott Griffith, CEO at Workhorse Group]

By reducing redundancies across our teams, integrating various facilities into a smaller footprint, standardizing our enterprise planning and reporting tools around a clear set of priorities, and having the Workhorse team focused on the highest and best uses of their time, we believe we set ourselves up to win in both the commercial trucking space and the mobile data center space. Second, we are making continued progress on our bill of materials, or BOM, cost reduction program, as well as our next-generation commercial vehicle platform. Together, we believe these efforts will enable us to not only capture greater market share in our existing step van business, but also unlock a substantially larger slice of the $23 billion medium-duty truck market. First, let's talk about how our engineering and design teams are working to take cost out of the platform itself. Supply chain.

[Scott Griffith, CEO at Workhorse Group]

We've begun discussions with new suppliers for key components that we expect will reduce the cost of our vehicles, and we're working with our existing suppliers to identify opportunities to reduce costs as well. Design and systems architecture. We're consolidating various systems, including thermal management and power electronics, into comprehensive all-in-one systems. For example, we're consolidating previously distributed high-voltage modules into a new smart power electronics hub, aptly named Smart Hub, reducing cost, weight, and assembly complexity while also enabling us to utilize a single design across multiple truck classes. We believe these efforts, alongside several others, are expected to result in a substantial reduction in the overall BOM costs. This work matters because we believe the tipping point for fleet electrification arrives when the purchase price of an electric truck is more closely comparable with its ICE equivalent.

[Scott Griffith, CEO at Workhorse Group]

The total cost of ownership case, which we have already demonstrated as superior to ICE, does the rest. We believe these efforts will result in substantial reduction in the overall BOM costs, which we believe will be important in driving broader adoption, as China's recent history in commercial electric trucks shows. In China, a few years ago, as prices for commercial electric trucks trended toward parity with internal combustion trucks, EV sales volumes grew from under 5% of units sold to over 50% of new truck sales in a few short years. We believe the U.S. truck market is poised to reach a similar breakpoint, and our BOM cost-down strategy and accompanying price strategy can be a catalyst to bend the EV truck adoption curve similar to the adoption spike in China that began a few years ago.

[Scott Griffith, CEO at Workhorse Group]

While we are working diligently to reduce BOM costs to compete with ICE vehicles in the step van category, our announced modular chassis and cab chassis efforts position us to move beyond the step van segment and into a wider range of Class 5/6 truck types, including box trucks, enabling Workhorse to compete in a much larger percentage of the $23 billion medium-duty truck market. We're also making exciting progress on our product development initiatives. Our first two programs are focused on the development of the next-generation chassis and powertrain platform, as well as the launch of our first Class 5/6 cab chassis vehicle. Our new chassis is being designed around a scalable, shared modular architecture that will fundamentally transform how our commercial electric trucks are engineered, manufactured, and deployed.

[Scott Griffith, CEO at Workhorse Group]

The chassis will build upon proven foundation and operational learnings of the Motiv Gen6 and Workhorse W56 platforms and be guided by our strategic cost reduction engineering process. This next-generation architecture will incorporate highly flexible wheelbase configurations, advanced battery and axle technologies, next-generation software capabilities, and an integrated Smart Hub. We will also be introducing a new braking system that will be compatible with the latest ADAS features and prepare us for an autonomous vehicle future. Our new modular chassis will be integrated with our step van products, and we will also be pairing it with a technically advanced low-cost Class 5/6 cab to create a lightweight, high-performance cab chassis platform optimized for efficient upfitting by body builders. We believe our entry into the cab chassis segment will allow Workhorse to compete for a much larger percentage of the $23 billion medium-duty truck market.

[Scott Griffith, CEO at Workhorse Group]

The resulting products are expected to deliver increased payload capacity, accelerated time to market for vocational applications, and perhaps most important, a more competitive price point compared to gas and diesel alternatives for fleet customers across a wide range of use cases. We are expecting to build initial development prototypes of the modular chassis for the W56 in Q4 2026, enabling testing and validation activities to begin shortly thereafter for a planned start of production for the new chassis platform in late 2027. Third, we are optimizing for a rapid production ramp through year-end and into 2027. We continued to build efficiencies across our supply chain and manufacturing processes in preparation for significantly higher volumes in the third and fourth quarters.

[Scott Griffith, CEO at Workhorse Group]

To put that in perspective, to fulfill existing firm orders in our backlog, we expect to produce more fully electrified Class 5/6 chassis and trucks over the next five months than in any prior five-month period in the company's history. While we are not yet providing specific revenue guidance, we expect over the next few quarters to deliver a substantial share of the previously announced orders placed by Purolator and Gateway Fleets. This kicks off what we believe will be a growing momentum in truck deliveries into 2027, something we will elaborate on in future calls. You may be wondering what is happening behind the scenes to build our order book and what gives me the confidence to anticipate an increase in our bookings and deliveries. Among other things, we are experiencing strong benefits from our refreshed sales approach, including a new enterprise sales team.

[Scott Griffith, CEO at Workhorse Group]

We are seeing increased demand for deliveries in late 2026 and 2027 from both existing and new customers. This new sales approach, which leverages the strong TCO and on-road performance of our W56 step van product line, combined with our 2026 promotional pricing, is continuing to drive product enthusiasm and market interest, which is turning into a growing backlog of firm orders and a sales pipeline that has more than doubled since the start of 2026. We believe the combination of our new pricing, the BOM cost-down efforts, and changes in our sales organization are contributing to increased interest among electric fleet customers while positioning us well to continue to build momentum as we progress through the two remaining quarters of this year and into 2027. Fourth, in July, we added a new Chief Financial Officer, Jody Davis. He is an excellent addition to our senior leadership group.

[Scott Griffith, CEO at Workhorse Group]

Jody brings many years of financial leadership across manufacturing, energy storage, aerospace, and technology companies with a track record of closing large capital rounds and guiding development-stage businesses into full production. He has built the finance infrastructure that capital-intensive companies need as they move from development into commercial scale, which is precisely where Workhorse is in its journey. We are glad to have Jody on the team, and you will be hearing more from him directly. I also want to thank our former CFO, Bob Ginnan, for his years of leadership and tireless work, including his efforts to finalize and close the Workhorse and Motiv merger and to lead key aspects of our integration. We all wish Bob and his family well in his retirement.

[Scott Griffith, CEO at Workhorse Group]

Fifth, we recently announced our intent to enter the mobile data center category with a turnkey, compute-ready mobile AI data center designed for the localized infrastructure needs of distributed AI deployments. We believe this is a substantial long-term growth opportunity for Workhorse for three key reasons. It is projected to be a high-growth market that is still in the early stages of development. Secondly, we have a head start. We believe the capabilities we have built and assets we already own provide us with important competitive advantages. And third, our go-to-market strategy is designed to reduce execution risk. We intend to serve as an engineering and manufacturing partner to our strategic partners who are experts in high-speed computing, AI software, and applications. Under this model, our partners would lead all end-market development, sales, and support with the ultimate end customer. Let us go a little deeper into this new strategy for Workhorse.

[Scott Griffith, CEO at Workhorse Group]

Starting with the market. Third-party research estimates the mobile data center market could reach $41 billion by 2031. This growth is being driven by demand for what is called edge or mobile computing. Simply put, we are seeing a new growth driver in AI infrastructure, the need for highly capable AI operations in close proximity to where the data, power, and mission are located. Here are a few reasons why. First, speed to deployment. By their very nature, mobile data centers can be deployed more quickly than traditional data centers. First, because of their size, they can be manufactured and deployed in the field in significantly less time than it takes to build a large, centralized data center. Second, they can be co-located directly at energy sources like solar, wind, nuclear, and natural gas, thus avoiding the long waits for interconnection to the existing electric grid you have likely read about. Mission-critical connectivity.

[Scott Griffith, CEO at Workhorse Group]

Remote exploration for natural resources, rural agriculture, military and disaster response operation, ships at sea, and even parts of the developing world do not have reliable high-bandwidth connections to a distant data center. Localized compute makes AI available in places the centralized model cannot reach and keeps critical systems running even when the network connection drops entirely. Ironclad data privacy. Healthcare data, financial transactions, biometric information, military applications, and proprietary industrial data increasingly come with regulatory requirements that restrict where the data can travel and be stored. Processing sensitive data at the edge close to its source helps organizations keep raw data in region or on-prem while still benefiting from AI, rather than routing everything through a centralized facility that may sit in another jurisdiction entirely. The industries where this kind of computing is most valuable include energy and utilities, defense and government, telecommunications, agriculture, and transportation, among many others.

[Scott Griffith, CEO at Workhorse Group]

Given the nature of edge computing, the systems being built to serve this market must be mobile, secure, and durable. Workhorse has extensive experience designing, engineering, testing, validating, and manufacturing vehicles with these exact attributes, and we believe these capabilities are readily transferable to our new product line. Let's take a closer look. We believe our engineering capabilities in power electronics, thermal management, ruggedized structures, mobile connectivity, vibration isolation, controls, and systems integration are well-suited to the development of deployable AI infrastructure capable of operating reliably in demanding field environments. Our approach is to combine those core Workhorse capabilities with proven commercial technologies and engineer them into a fully integrated, purpose-built system. Where additional or specialized expertise is required, we intend to work with experienced development partners and technology suppliers to accelerate development. Importantly, we see Workhorse's role extending well beyond simply packaging these components into a containerized structure.

[Scott Griffith, CEO at Workhorse Group]

We intend to own the overall system architecture, integration controls, validation, and product evolution, translating customer mission requirements into a rugged, scalable platform that can support multiple configurations and future applications. Our Union City facility is well-suited for this type of high-mix, low-volume manufacturing, where close interaction between engineering and production enables rapid design iteration, prototype builds, validation, and continuous product improvement. We believe this combination of internal engineering capability, specialized development partners, proven technologies, and flexible manufacturing can allow us to move from customer requirements to deployable products at the pace this emerging market demands. Our go-to-market approach will be partnership based. Under this model, Workhorse serves as the design, engineering, and manufacturing partner, while our customers lead market development and manage the end customer relationship. We believe this partnership approach will work, because it pairs two companies doing what each does best.

[Scott Griffith, CEO at Workhorse Group]

Our customers will know the end user, the workload, and the deployment environment. Workhorse knows how to design, test, validate, and manufacture ruggedized mobile platforms at commercial scale. Think of us as a Tier 1 supplier to the final mobile data center platform integrator. We'll leverage the demand generation, customer relationships, and market development activity of our clients rather than requiring us to build a sales and market development organization from scratch. We believe this approach will offer us a capital-efficient path to commercialization and keeps our team focused on existing sources of operating leverage, like our engineering and development capabilities and our plant in Union City. We're targeting 2027 for the commencement of production and commercial deliveries, and we expect to provide updates on development milestones and the production ramp in the quarters ahead. Financially, the strategic logic is straightforward.

[Scott Griffith, CEO at Workhorse Group]

We believe this product line can provide new, potentially significant sources of revenue and cash flow, increase the utilization of operating leverage of our existing manufacturing, test, and validation assets, and help fund continued progress on vehicle cost reduction and new model development. With that, let me hand it over to Jody for the Q2 financials.

[Jody Davis, CFO at Workhorse Group]

Thanks, Scott, and good afternoon, everyone. This is my first earnings call as Workhorse's Chief Financial Officer, so let me briefly share why I joined. Workhorse has a combination that is still rare in the commercial vehicle electrification, a product that already delivers strong operator economics, a manufacturing facility that is built and running, and a blue-chip customer base of the largest medium-duty fleets in North America. Bringing an electric commercial vehicle to market usually means years spent proving the product works while simultaneously trying to fund the plant to build it. We have cleared both of those hurdles. A critical part of the work ahead is financial execution, putting the right capital structure in place while managing costs with discipline and building the systems and reporting this company needs to operate at scale. That is the work I know how to do, and that is why I joined Workhorse.

[Jody Davis, CFO at Workhorse Group]

I am only a few weeks into the role, but it is what is ahead of us that truly excites me, and I am highly confident in our strategy and the path in front of us. Before walking through the numbers, I want to provide some context on comparability. Our consolidated results for the second quarter of 2026 reflect the fully combined Workhorse and Motiv operation. Comparative information for the second quarter of 2025 reflects only Motiv, the accounting acquirer in the reverse merger. As a result, certain year-over-year comparisons are not on a like-for-like basis. Where helpful, I will reference the unaudited pro forma combined figures included in today's press release so you have the right reference point. Revenue for the second quarter of 2026 was $3.6 million, compared to $0.8 million in the second quarter of 2025 on a GAAP basis.

[Jody Davis, CFO at Workhorse Group]

We delivered 26 vehicles in the quarter compared to four vehicles in the prior year period. On a pro forma combined basis, revenue for the prior year quarter was $6.4 million, reflecting delivery of 39 vehicles. For the first half of 2026, revenue was $7.9 million, roughly in line with the pro forma combined revenue of $8.2 million in the first half of 2025. Cost of sales for the second quarter was $11 million, resulting in a gross loss of $7.5 million, consistent with the first quarter. We continue to expect gross margin to improve as we scale production volumes at Union City and realize the cost benefits of the combined platform. Selling, general, and administrative expenses were $7.8 million in the second quarter compared to $4.5 million in the prior year period, with the increase driven by the inclusion of the full combined company cost base in 2026.

[Jody Davis, CFO at Workhorse Group]

As a publicly traded company, we now have higher costs for accounting, legal, investor relations, and other costs that Motiv did not incur as a privately held company. While costs are higher than last year, we are realizing synergies from the redundant headcount and other operating costs as we remain on track to exit 2026 at our previously communicated $20 million in annualized cost synergy run rate. Research and development expenses were $4.1 million in the second quarter, compared to $3.2 million in the prior year period. The increase reflects continued strategic investment in our initiative to lower the total bill of materials cost on our vehicles towards ICE comparable levels. Loss from operations was $19.4 million in the second quarter, compared to $9 million in the prior year period. Interest expense net was $0.8 million compared to $3.8 million in the prior year period.

[Jody Davis, CFO at Workhorse Group]

The lower interest expense is due to restructuring our debt as part of the merger, which resulted in lower debt levels in the current quarter at lower interest rates than the prior year. Net loss for the quarter was $20.2 million, or $1.86 per basic and diluted share, compared to a net loss of $12.8 million or $1.38 per share in the prior year period. Turning to the balance sheet, as of June 30th, we had $9.6 million in cash and cash equivalents, +$0.7 million in restricted cash. During the first half, we drew $20 million under our cash flow credit agreement, bringing outstanding balance to $30 million and $18.3 million under our customer order credit agreement. After quarter end, in August, we amended our cash flow credit agreement to increase its capacity and borrow an additional $10 million to fund our operations.

[Jody Davis, CFO at Workhorse Group]

As of the filing of our 10-Q, we had $1.7 million available to borrow under our current credit agreements. We are not providing specific financial guidance at this time. With that said, we expect deliveries to increase meaningfully in the second half of 2026 as we ramp production at Union City. That ramp supports our previously announced orders of 100 vehicles, each from Purolator and Gateway Fleets, as well as purchase orders from other customers. We continue to work to convert our pipeline of orders and revenue in the second half of 2026. With that, let me turn it back to Scott for closing remarks.

[Scott Griffith, CEO at Workhorse Group]

Thanks, Jody. In summary, Workhorse has made tremendous strides in our plan to establish the leading position in the medium-duty commercial trucking segment. Our integration efforts are succeeding in reducing costs and optimizing the company for growth. Our engineering and design teams are finding ways to reduce costs today while unlocking future growth through low cost and more flexible platforms that can also expand our addressable target market in the commercial truck segment. We are developing an exciting new line of business in the mobile data center category, where we can leverage current capabilities and assets to offer a compelling value proposition to a high-growth market. We have strengthened the executive team, set clear goals, and structured the overall organization to deliver our promises to customers and, most importantly, to our shareholders. I am looking forward to a strong finish to 2026 and an even stronger 2027.

[Scott Griffith, CEO at Workhorse Group]

We appreciate your continued support and we look forward to updating you on our progress in the months ahead. Operator, you may now open the lines for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. We ask that you please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Ben Sommers with BTIG. Please proceed with your question.

[Ben Sommers, Analyst at BTIG]

Hey, good afternoon, guys, and thank you for taking my questions, and welcome to the team, Jody. First, wanted to ask on the pivot to the AI data centers, and if you could just talk a little bit more about the steps you need to get to commercialization by 2027 and just any preliminary feedback you guys have had since the announcement a little while ago. Thank you.

[Scott Griffith, CEO at Workhorse Group]

Hey, Ben. Nice to hear from you. It's Scott, and I'll ask Jody to tap in here. I think the key steps right now are what I would call a phase zero, developing the platform itself, and finishing the initial design. What we're targeting, Ben, is something that's, I wouldn't say it's universal, but something that will fit a number of different applications. We have some initial thinking on that. We're out polling the market right now. So finishing that and then getting into prototyping, and being prepared for manufacturing. Those steps probably take in the next 10 to 12 months for us to finish. So those are all internal, based on market feedback we've had so far. We're also developing an expanded list of supply chain partners who are going to be suppliers to that business as well. That's well underway now.

[Scott Griffith, CEO at Workhorse Group]

There's some hiring, although a lot of crossover right now, as we noted in the comments earlier. Most of the hiring will come as we really dive into specific customer applications that we build. What we're trying to do is build a, much like our chassis, think of it as sort of a modular containerized system that can be compatible with different applications. I'd say the other most important part is developing these key front-end partnerships. We use the term tier 1 supplier to these key partners. They're the folks that will be globally around the world looking for applications, customers, and specific needs that our combined offering will come together. We'll supply the containerized system.

[Scott Griffith, CEO at Workhorse Group]

They will put all the compute software, any of the communications systems that are associated with those, and any of the in-country or in-region areas that are outside jurisdictions we typically deal with, that will all be our partner. Those conversations are well underway. Frankly, that was a big part of our due diligence on whether to even enter this market. This was not a market we entered lightly by any means. It is one we did a lot of research in. We talked about a $40+ billion market out in a few years, and we really did quite a bit of research and digging into where we think we could really apply applications to do that. Those are sort of the initial things, developing that platform that is modular, much like our chassis, and developing these initial partnership relationships that are going to be market development partners for us.

[Scott Griffith, CEO at Workhorse Group]

We are well on our way on both of those fronts now. I do not know, Jody, if you want to add to that.

[Jody Davis, CFO at Workhorse Group]

Yeah, the only thing I would add to that is really our factory footprint and really leveraging the factory in Union City. We have a lot of the talent in-house already that we can utilize. I feel our capabilities internally are really well suited to be able to capture early adoption and development over the next year and a half.

[Ben Sommers, Analyst at BTIG]

Super helpful. For my follow-up, just wanted to ask a bit more on the supplier discussions that you guys spoke about and potentially reducing cost. How much of this is under your guys' control versus how much of it is just market driven and just reliant on cost components just coming down? Just curious how much control you guys have over reducing the cost of goods sold here.

[Jody Davis, CFO at Workhorse Group]

You are specifically referring to the BOM cost on the vehicle?

[Ben Sommers, Analyst at BTIG]

Exactly. Yep.

[Jody Davis, CFO at Workhorse Group]

Yeah. Good question. We have a cost-down strategy, and it is not just working with the current suppliers, it is really rethinking how we think about the overall BOM cost. With that strategy, we are looking at new potential suppliers as well that really can help drive our cost down from where we are today and really drive a positive growth margin. So we are working with those partners, and we are looking for new partners, and we really think that this is a 12 to 18-month time frame for us. That way we can have our pathway to free cash flow positive and really drive financial discipline within the company.

[Scott Griffith, CEO at Workhorse Group]

Yeah. The thing I would add, Ben, it is Scott, I think in addition to Jody's comments, definitely looking at new suppliers in addition to current suppliers, and also looking at some of the most high-value components that we have used historically. Things like batteries, e-axles, and braking systems, steering systems, all those really high-value components. Can we co-develop together with some of our really key suppliers? This supply chain is really global now. Frankly, a lot of the best suppliers are coming from outside the U.S., even Canada, Europe, obviously China is a part of that now. So we are really scouring globally, and expanding the reach of what our supply chain experts are looking for, and we are talking directly to some of those highest-value suppliers. What is in their product pipeline that we need to incorporate? It is one of the benefits of that modular chassis approach we talked about.

[Scott Griffith, CEO at Workhorse Group]

We want to be able to swap in new components as they come along from our suppliers. We are working with them directly to understand what is their three or four-year roadmap too, and how do we build that into our engineering structure as we expand. When we say our BOM cost-down program, that is a multi-year ongoing effort. We will never finish that, Ben. That is really how we are thinking about it. It is exciting to see what is happening, particularly as passenger cars expand globally. The commercialization of larger components for commercial trucks have also started to catch up now to some of those technologies. Things like 800-volt systems that historically were more 400-volt systems that everyone seems to be converting to. It is following their technology advancement curve and incorporating that into our designs as they incorporate too.

[Ben Sommers, Analyst at BTIG]

Super helpful. Thank you guys for taking my questions.

[Operator]

We have reached the end of the question and answer session. This concludes today's teleconference. You may disconnect your lines at this time. Thank you.

Participants

Executives

• John Williams, Chief Communications Officer
• Scott Griffith, CEO
• Jody Davis, CFO

Analysts

• Ben Sommers, Analyst at BTIG