Workhorse’s 2025 Q4 Earnings Call: Gross Margin Delays, Motiv Strategy Shifts Spark Contradictions

Date of Call: Mar 31, 2026

Financials Results

• Revenue: $9.7M for Q4 2025, compared to $6M in Q4 2024. Full-year revenue $21.2M vs. $7M in 2024 (pro forma $34M vs. $13.7M 2024).
• Gross Margin: -$5.7M for Q4 2025, compared to $9M cost of sales in Q4 2024 (gross margin loss).
• Operating Margin: Operating loss $20.1M in Q4 2025 vs. $16.5M loss in Q4 2024.

Business Commentary:

Revenue and Delivery Growth:

• Workhorse reported revenue of $9.7 million for Q4 2025, compared to $6 million in Q4 2024, with 112 units delivered in 2025, up from 46 units in 2024.
• The increase was driven by deliveries of follow-on orders from existing customers and the integration of Motiv Electric Trucks.

Cost Synergies and Margin Improvement:

• The company expects to achieve $20 million in annualized cost synergies by the end of 2026 through manufacturing consolidation, headcount reductions, and supply chain efficiencies.
• Workhorse anticipates gross margin improvement as production volumes scale and cost benefits from the combined platform are realized.

Product Expansion and Market Penetration:

• Workhorse expanded its product portfolio to include Class 4 shuttles, transits, and school buses, broadening its reach into the SLED fleet segment.
• The introduction of a new lower-cost configuration of the W5-6 step van reflects the first wave of synergy savings passed to customers, enhancing competitiveness.

Strategic Focus on Profitability:

• Workhorse believes it can reach cash flow breakeven by the end of 2028 by capturing approximately 1% of the North American medium-duty truck market, or about 2,500 vehicles per year.
• The company's existing manufacturing capacity at Union City, Indiana, supports this target without requiring significant new capital expenditures.

Financial Position and Capital Strategy:

• The combined company reported $12.9 million in cash and cash equivalents and has access to a $40 million customer order lending facility.
• Workhorse is actively evaluating financing alternatives to strengthen its balance sheet and support growth, aiming to capitalize on current commercial momentum.

Sentiment Analysis:

Overall Tone: Positive

• Executing against merger commitments, with 1,100+ trucks on road, 20M+ miles driven, 64% cost savings documented, repeat purchase behavior from top fleets. 'Momentum at Workhorse is real.' Path to profitability seen as achievable with existing plant capacity and clear cost reduction plan.

Q&A:

• Question from Craig Irwin (Roth Capital Partners): In the fourth quarter, you obviously would have had some material one-time expenses related to closing the merger. Maybe describe what those were and break those out in a little bit of detail. You know, with that, you know, how do the $20 million in synergies cut into the PNL over the course of 2026?
  Response: One-time merger fees ~$4.9M. $20M in annualized synergies to be reached by end of 2026, driven by manufacturing consolidation, headcount reductions, elimination of redundant costs, and facility consolidation.

• Question from Craig Irwin (Roth Capital Partners): With the significant change in your manufacturing footprint, would you be optimistic about reaching positive gross margins on your revenue by the fourth quarter this year?
  Response: Not expected to reach positive gross margins by Q4 2026; more near-term as volume increases.

• Question from Ben Somers (BTIG): Kind of wanted to ask on the step van market here and just your outlook there, and then I guess any kind of preliminary feedback we’ve gotten on the new lower-cost model?
  Response: Preliminary feedback on new lower-cost W5-6 step van model is positive from dealers and buyers; expected to provide more news in coming weeks.

• Question from Ben Somers (BTIG): I know you guys mentioned that there’s just minimal work to be done there. I guess if you just give any more color on kind of what we need to do to get to that 5,000+ capacity. I know you guys mentioned that’s pretty much minimal CapEx there, so just kind of curious what’s left to be done.
  Response: Minimal CapEx needed; moving a second production line to Union City in Q2, adding a third line for Class 4 trucks, leveraging existing footprint.

• Question from Mike Shlisky (D.A. Davidson): Going forward, how will the Workhorse product and the Motiv product differ in the eyes of the customer? Trying to figure out, like, what will the builds be in 2026. More of the Motiv, more of the Workhorse, or more of the Class 4.
  Response: Sunsetting Motiv Class 5-6 chassis after fulfilling backlog; ramping new Class 5-6 cab chassis and Class 4 lines, anticipating at least three production lines running by end of Q2 2026.

• Question from Mike Shlisky (D.A. Davidson): My other question was around the bill of materials. I’m curious as to, you know, give us a ballpark or just some basic guidepost as to how much or how you plan to reduce the bill of materials during 2026 and whether supply chain is, you know, can that be brought under control by the end of the year?
  Response: Focus on commonizing components (batteries, motors, brakes) across classes to reduce BOM and achieve ICE-competitive pricing; W5/6 140kW launch is an example. No specific reduction target given yet; updates to come as roadmap progresses.

Contradiction Point 1

Gross Margin Breakeven Timing

Contradiction on when gross margin breakeven is expected to be achieved, shifting from a target within 2026 to after 2026.

Craig Irwin (Roth Capital Partners) - Craig Irwin (Roth Capital Partners)

2025Q4: Gross margin breakeven is not expected in 2026. It will likely come after ramping volume and realizing cost benefits from the integrated platform... - Scott Griffith(CEO)

Do you expect positive gross margins by Q4 2026 following the manufacturing footprint changes? - Benjamin Sommers (BTIG, LLC, Research Division)

2025Q3: Every truck built for 2025 has a purchase order with an HVIP voucher already secured. Field data from FedEx Ground operators shows high reliability (97-98% uptime), leading to repeat orders and a site in California now operating over 20 W56s. - Richard Dauch(CEO)

Contradiction Point 2

Primary Drivers for Cost Reduction

Contradiction on the main methods for achieving cost improvements, shifting focus from BOM and labor to commonizing components.

Mike Shlisky (D.A. Davidson) - Mike Shlisky (D.A. Davidson)

2025Q4: The key BOM reduction areas are commonizing components across Class 4, 5, and 6 trucks (batteries, powertrains, braking systems, chassis rails). - Scott Griffith(CEO)

What is the planned bill of materials (BOM) reduction for 2026 and can the supply chain be stabilized by year-end? - Benjamin Sommers (BTIG, LLC, Research Division)

2025Q3: Cost improvements will come from two areas: 1) Bill of Material (BOM) costs through engineering and supply chain efforts; 2) Labor costs as production volume increases and manufacturing processes mature. - Robert Ginnan(CFO)

Contradiction Point 3

Strategy for Product Portfolio and Production Lines

Contradiction on the future production mix and handling of Motiv's product lines, shifting from a joint development plan to winding down Motiv lines.

Mike Shlisky (D.A. Davidson) - Mike Shlisky (D.A. Davidson)

2025Q4: The former Motiv Class 5-6 chassis line will be wound down after fulfilling existing orders... Production will shift to ramping new lines: the new Workhorse Class 5-6 cab chassis and the Class 4 truck line. - Scott Griffith(CEO)

How will the Workhorse and Motiv products differ for customers, and what will the production mix look like in 2026 (more Motiv, more Workhorse, or more Class 4)? - Shareholder Question (via email)

2025Q2: The combined company will offer a full range of Class 4-6 trucks, leveraging the most advanced products from both. Joint development of a Class 5/6 cab chassis and a long-term product roadmap will be pursued. - Scott W. Griffith(CEO), Richard F. Dauch(CEO)