DJ Workhorse Stock Is Tumbling Because the Company Recalled Its EV Trucks and Halted Production. Here's What Comes Next. -- Barrons.com

Dow Jones · 2021-09-22 09:21

By Al Root

Commercial EV maker Workhorse (ticker: WKHS) is suspending production of its electric delivery vans and recalling the ones it already built. That has the stock tumbling.

Shares are down about 12% in premarket trading, while S&P 500 and Dow Jones Industrial Average futures are off up about 0.5%.

"Our new leadership team is taking decisive and necessary actions as we conduct our comprehensive operational review of the business," said new Workhorse CEO Rick Dauch in the company's news release. "We have identified a number of opportunities to improve our C-1000 series vehicles and are committed to getting these previously delivered vehicles back on the road."

The C-1000 vehicles are about the size of a UPS delivery van. Workhorse is working to replace traditional delivery vans with all-electric products.

Dauch was named CEO in July. He's a longtime automotive executive. The silver lining for investors is that he appears to be radically changing the company's approach to production and commercialization. "We remain on track to communicate our new, long-term strategic roadmap to enhance our trucks and operational capabilities on our third quarter earnings call," added Dauch in the news release. "We continue to be confident in our ability to be a leading manufacturer of last-mile delivery vehicles over the long term."

The third-quarter call should happen in early November.

Coming into Wednesday, Workhorse stock was down about 59% year to date and down about 81% from its 52-week high of almost $43 a share, reached in February.

Barron's wrote positively about Workhorse, while panning Nikola (NKLA) shares, back in July 2020, arguing that new USPS business and the ramp of production of its delivery vans were two potential positives. But the company didn't win the USPS business and production hasn't gone as smoothly as hoped. Now, with a new CEO making changes Workhorse is a totally different kind of investment. Now, Workhorse is a turnaround story, not a growth story.

Manufacturing vehicles isn't easy, a lesson that some electric vehicle startups are learning the hard way.

Write to allen.root@dowjones.com

(END) Dow Jones Newswires

September 22, 2021 09:21 ET (13:21 GMT)