Workhorse's Q3 2025 Earnings Call: Contradictions in State Incentives, Cost Structure, Supply Chain, and R&D Priorities

Date of Call: November 11, 2025

Financials Results

• Revenue: $2.4M for Q3 2025, down $0.1M YOY (from $2.5M in Q3 2024)

Guidance:

• Proposed merger with Motiv expected to close in Q4 2025, subject to shareholder approval and customary conditions including debt financing.
• Combined company expected to access up to $20M in additional debt financing post-close to fund execution.
• W56 140-kW production launch planned for 2026 with ~120-mile range and ~10% lower acquisition price.
• Continue prioritizing cash conservation, operating expense reductions and growing purchase orders/revenue.
• W56 remains eligible for California HVIP vouchers (~$85,000 per truck).

Business Commentary:

* Sales Trends and Challenges: - Workhorse Group Inc. reported sales of $2.4 million for Q3 2025, with a decrease of $100,000 compared to the same period in 2024. - The decrease was primarily due to lower sales of approximately $2.3 million related to delivery of fewer trucks in 2025. - Despite the challenges, Workhorse maintained financial discipline and cash conservation.

• Cost Management and Savings:
• Workhorse reduced operating expenses by $1.2 million on a year-over-year basis, with even more impressive results year-to-date.
• Cost management was driven by a $3.6 million increase in consulting and legal expenses due to the proposed Motiv merger, offset by a $2.9 million decrease in employee compensation and related expenses.
• The company also reduced IT-related expenses by $300,000.

• Financial Strengthening:
• Workhorse increased its cash and cash equivalents to $38.2 million by the end of Q3 2025, compared to $4.6 million in the same period last year.
• The increase was primarily due to the benefits from funding totaling approximately $25 million for Motiv's controlling investor, including a $20 million sale leaseback transaction and a $5 million secured convertible note financing.

• The company recognized a gain of $13.8 million related to the sale-leaseback of its Union City, Indiana facility.

• Product Innovation and Market Expansion:

• Workhorse announced the availability of the Utilimaster Aeromaster body on its all-electric W56 strip chassis, expanding its product portfolio and flexibility.
• The company showcased its W56 step van at the FedEx Forward Service Provider Summit, demonstrating its reliability and trustworthiness in the market.
• Workhorse continues to engage with logistics providers and service fleets to build additional order interest through its national dealer network.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized stronger near-term liquidity (cash and restricted cash $38.2M vs $4.6M prior year), a narrower net loss ($7.8M vs $25.1M), a $20M sale-leaseback and $5M note, 97%+ W56 uptime and repeat orders, and stated they are "focused on finishing 2025 on strong footing" and "confident in our ability to continue to deliver value".

Q&A:

• Question from Benjamin Sommers (BTIG, LLC, Research Division): So kind of on the W56 step van and kind of being eligible for those state-level incentives in California, kind of curious just more broader market outlook. How you're seeing state-level incentives across the U.S. kind of panning out in different states and what you think the opportunities are beyond California for the step van?
  Response: HVIP in California drove immediate orders; management is targeting Washington and New York next; every truck built currently has a purchase order and HVIP voucher tied to it, and field reliability (97–98% uptime) is generating repeat orders.

• Question from Benjamin Sommers (BTIG, LLC, Research Division): Awesome. And then just kind of curious on costs as we ramp closer towards production of this vehicle, how should we be thinking about that trending in '26 as we get prepared for the production launch there?
  Response: Expect BOM cost reductions via engineering and supply‑chain actions and lower labor per unit as production cadence increases; contract de‑escalators and battery scale at higher volumes will further reduce costs toward parity with ICE over time.

Contradiction Point 1

State-level Incentives and Market Penetration

It reflects differing perspectives on the role and impact of state-level incentives on market penetration, which is crucial for sales strategy and growth projections.

How do you see state-level incentives in different U.S. states developing, and what are the opportunities for the step van beyond California? - Benjamin Sommers (BTIG, LLC, Research Division)

2025Q3: We have one site in California now that's operating more than 20 W56 step vans. Once we get a truck in the hands of a ground operator and they see the reliability of our truck averaging 97%, 98% uptime, we're seeing repeat orders from multiple FedEx ground operators. - [Richard Dauch](CEO)

Can you elaborate on your collaboration with Hudson County Motors and the New Jersey ZIP program? Have vouchers been procured for clients, and can they drive growth? - Craig Irwin (ROTH Capital Partners, LLC, Research Division)

2025Q2: We have a great relationship with Hudson County Motors, which is extensible. The New Jersey ZIP program offers a voucher program that Motive is involved in. Consultative sales approaches are key, combining direct sales with dealer involvement for future growth. - [Scott W. Griffith](CEO, Motiv)

Contradiction Point 2

Cost Structure and Savings

It highlights differing interpretations of cost dynamics, which are critical for production planning and financial forecasting.

How should we assess costs as production ramps up for the vehicle by 2026? - Benjamin Sommers (BTIG, LLC, Research Division)

2025Q3: We look to see improvements in both areas as we go forward. There are improvements in the bill of material cost. As the production increases, there will be an improvement in the labor cost. We're starting to see that with 3 or 4 trucks now perfectly built. We have de-escalators in our purchase contracts when we hit certain volumes down the road. - [Robert Ginnan](CFO)

How will the combined company access government programs and manage growth through 2026? - Craig Irwin (ROTH Capital Partners, LLC, Research Division)

2025Q2: Growth will be supported by a stronger balance sheet, which gives confidence to large fleets. CARB incentives have been restored, which is positive for EV adoption. Motiv's financial structure provides working capital support. The goal is to be cost-competitive, reducing TCO, and expanding product offerings. - [Richard F. Dauch](CEO, Workhorse) and [Scott W. Griffith](CEO, Motiv)

Contradiction Point 3

State Incentives and Market Opportunities

It highlights differing perspectives on the role of state incentives and market opportunities, which are crucial for strategic decision-making and business growth.

How do state-level U.S. incentives shape up, and what opportunities exist for the step van outside California? - Benjamin Sommers (BTIG, LLC, Research Division)

2025Q3: We are seeing good movement in the state of Washington and the State of New York in terms of vouchers. We have turned our efforts to those 2 areas for sure. - [Richard Dauch](CEO)

What are the challenges and opportunities in the EV market for medium-duty commercial vehicles? - Operator

2024Q4: Regulatory uncertainties and market slowdowns have created challenges. Workhorse maintains focus on developing products that meet fleet needs and extending financial runway. The company sees opportunities in states with effective incentive programs. - [Richard Dauch](CEO)

Contradiction Point 4

Supply Chain and Battery Supplier Diversification

It involves the company's approach to supply chain management and diversification, which is crucial for production and delivery capabilities.

How should we think about costs as production of this vehicle ramps up in 2026 and the production launch approaches? - Benjamin Sommers (BTIG, LLC, Research Division)

2025Q3: We are very happy with our current supplier. We've been working with them for quite some time. I have no issues with them. - [Robert Ginnan](CFO)

Can you explain how supply chain challenges are affecting Workhorse's operations? - Sell-side Analyst (Unknown)

2025Q1: The supply chain remains challenging, but Workhorse is actively engaging with new North American battery suppliers to strengthen its supply chain. - [Rick Dauch](CEO)

Contradiction Point 5

R&D Expenditures and Product Development

It demonstrates differing views on the impact of reduced R&D expenses on product development, which is vital for innovation and competitive advantage.

How will state-level incentives across the U.S. develop, and what opportunities exist for step vans outside California? - Benjamin Sommers (BTIG, LLC, Research Division)

2025Q3: We are also 100% focused on the step van, and this is a key product that's making significant inroads in the market. - [Richard Dauch](CEO)

Can you explain the significant decrease in R&D expenses and its impact on product development? - Operator

2024Q4: The focus remains on completing development and launching new products, including the W56 208-inch wheel-based model. - [Robert Ginnan](CFO)