DEFA14A: Workhorse & Motiv Merge, Eye EV Truck Market Leadership

Workhorse Group Inc. announced a strategic merger with Motiv Electric Trucks, aiming to create a leading North American medium-duty electric truck OEM.

Summary

• Workhorse Group Inc. (WKHS) is pursuing a strategic merger with Motiv Electric Trucks, as detailed in an investor presentation on August 19, 2025.
• The merger is expected to broaden the product portfolio, strengthen the financial position, and create operational scale with potential cost synergies of over $20 million by the end of 2026.
• Post-transaction, Motiv's controlling investor will hold approximately 62.5% ownership, Workhorse shareholders approximately 26.5%, and the senior secured lender approximately 11%.
• The combined entity anticipates $45 million in new financing capacity by closing, including a $20 million debt financing from Motiv's controlling investor affiliates and a $5 million secured convertible note.
• Workhorse reported Q2 2025 revenue of $5.7 million, a significant increase from $0.8 million in Q2 2024, primarily due to increased W56 truck deliveries.
• The company's net loss for Q2 2025 was $(14.8) million, an improvement from $(26.3) million in Q2 2024.
• Operating expenses were reduced by $7.0 million year-over-year in Q2 2025, driven by decreases in SG&A and R&D expenses.
• Workhorse secured 36 purchase orders and shipped 32 units in Q2 2025, with W56 vehicles now in service with FedEx and other fleets.
• The W56 140 kWh model completed testing, offering 100+ mile range with full payload, and is now available with the Utilimaster Aeromaster walk-in van body.
• As of June 30, 2025, Workhorse had $24.7 million in cash and cash equivalents, including restricted cash.

Sentiment

Score: 6

Explanation: While Q2 financials show improvement in revenue and reduced losses, the company still operates at a significant net loss and has increased convertible debt. The strategic merger with Motiv is a positive long-term move, bringing capital infusion and synergy potential, but also introduces integration risks and significant shareholder dilution. The outlook is cautiously optimistic, pending successful execution of the merger and integration.

Positives

• Q2 2025 revenue increased significantly to $5.7 million from $0.8 million in Q2 2024, driven by W56 truck deliveries.
• Net loss for Q2 2025 improved to $(14.8) million from $(26.3) million in Q2 2024.
• Operating expenses decreased by $7.0 million year-over-year in Q2 2025 due to disciplined cost management, including lower employee compensation, consulting, legal, and IT expenses.
• The strategic merger with Motiv Electric Trucks is expected to create a leading North American medium-duty electric truck OEM with a broader product portfolio and stronger customer relationships.
• The combined company is projected to achieve over $20 million in cost synergies by the end of 2026.
• The merger is expected to bring in $45 million of added financing capacity by closing, providing near-term liquidity and simplifying the capital structure.
• Workhorse secured 36 purchase orders and shipped 32 units in Q2 2025, indicating growing fleet momentum and positive customer feedback.
• The W56 140 kWh model completed testing, demonstrating a 100+ mile range with full payload, and new application options like the Utilimaster Aeromaster body are available for order.
• The Union City manufacturing facility is established as a high-quality U.S. EV production hub with capacity for up to 5,000 trucks per year.

Negatives

• Workhorse reported a gross loss of $(7.4) million in Q2 2025, an increase from $(6.5) million in Q2 2024, primarily due to higher cost of sales and increased inventory excess and obsolescence reserve.
• The company continues to operate at a net loss of $(14.8) million for Q2 2025 and $(35.4) million for the six months ended June 30, 2025.
• Convertible notes at fair value significantly increased to $39.5 million as of June 30, 2025, from $10.5 million as of December 31, 2024, indicating increased debt financing.
• Existing Workhorse shareholders will experience significant dilution, holding approximately 26.5% ownership in the combined entity post-transaction.

Risks

• The outcome of continuing discussions between Workhorse and Motiv regarding the transactions, including the possibility of termination or changes in terms.
• The ability to successfully consummate the transactions or achieve the expected synergies and efficiencies from the merger.
• Potential regulatory delays in obtaining necessary approvals for the transactions.
• The industry and market reaction to the merger announcement.
• The effect of the merger announcement on the ability of the parties to operate their businesses, retain and hire key personnel, and maintain favorable business relationships.
• The possibility that the integration of Workhorse and Motiv may be more difficult, time-consuming, or costly than expected, or that operating costs and business disruptions may be greater than expected.
• The ability to obtain regulatory and other approvals required to consummate the transactions, including from Nasdaq.
• The risk that the price of Workhorse's securities may be volatile due to a variety of factors.
• Changes in laws, regulations, technologies, the global supply chain, and macro-economic and social environments affecting the business.
• The ability to maintain compliance with Nasdaq rules and otherwise maintain the listing of securities on Nasdaq.

Future Outlook

The combined Workhorse and Motiv entity aims to become a leader in the North American medium-duty electric truck segment, targeting over $20 million in cost synergies by the end of 2026. The company plans to fulfill existing fleet purchase orders, expand dealer-led sales, and convert finished goods inventory into cash. Future plans include finalizing the W56 140 kWh production launch in 2026 and developing an integrated R&D and product portfolio roadmap. The combined company will seek to raise additional capital post-closing to drive strategic direction and increase margins.

Management Comments

• Management is focused on disciplined cost management, having reduced operating expenses by $7.0 million year-over-year.
• The company is maintaining focus on cash conservation while executing key deliveries and advancing the product roadmap.
• Efforts are continuing to convert finished goods inventory into cash.
• The strategic combination with Motiv is expected to leverage a strong foundation, combining complementary products, fleet relationships, and dealer networks to create operational scale, cost synergies, and enhanced competitive positioning.
• The strengthened financial foundation from the merger is intended to support roadmap advancement, margin expansion, and long-term growth.

Industry Context

The merger positions Workhorse and Motiv to become a significant player in the rapidly expanding $23B+ North American medium-duty electric truck market. By combining their complementary product portfolios (Class 4-6 trucks and buses) and customer bases, the merged entity aims to accelerate EV adoption through compelling total cost of ownership. The focus on scalable U.S. manufacturing and a dual direct sales/dealer network approach aligns with industry trends towards comprehensive fleet solutions and localized production.

Comparison to Industry Standards

• The combined entity's 980 cumulative vehicles delivered and 17M+ cumulative real-world miles driven demonstrate a significant operational footprint in the medium-duty EV sector, providing a strong data-backed foundation for future sales compared to newer entrants.
• The Union City manufacturing facility's capacity of up to 5,000 trucks per year positions the company to compete with established commercial vehicle manufacturers transitioning to EV, such as Ford's E-Transit or GM's BrightDrop, by offering dedicated medium-duty solutions.
• The combined company's existing commercial relationships with 10 of the largest medium-duty fleets in North America, with low overlap, suggests a strong market penetration and cross-selling opportunity that could rival the reach of larger, more diversified logistics solution providers.

Related Party Transactions

• Motiv's controlling investor provided ~$25 million in interim funding to Workhorse on August 15, 2025.
• Motiv's controlling investor affiliates provided a $5 million secured convertible note.
• Entities affiliated with Motiv's controlling investor are expected to provide up to $20 million in additional debt financing post-close, including a revolving credit facility and an ABL facility.

Stakeholder Impact

• **Shareholders:** Existing Workhorse shareholders will experience significant dilution, holding approximately 26.5% of the combined company. However, they gain exposure to a potentially stronger, more diversified entity with improved financial footing and growth prospects.
• **Employees:** The merger aims for operational scale and cost synergies, which could lead to integration challenges or restructuring, but also offers opportunities within a larger, more competitive organization.
• **Customers:** The combined company will offer a broader product portfolio (Class 4-6 trucks and buses) and an expanded sales and service network, potentially leading to more comprehensive solutions and improved support.
• **Suppliers:** Increased operational scale and production capacity could lead to larger order volumes for suppliers, but also potential renegotiations for cost synergies.
• **Creditors:** The capital infusion and debt restructuring associated with the merger are intended to strengthen the company's financial position, potentially improving creditworthiness and reducing risk for lenders.

Next Steps

• Obtain shareholder approvals for the merger transaction.
• Close the transaction and associated financing commitments, targeting Q4 2025.
• Fulfill existing fleet purchase orders.
• Expand dealer-led sales and continue converting finished goods inventory into cash.
• Focus on developing a strategic go-to-market strategy for the combined entity.
• Advance planning to optimize operations through combined engineering, supply chain, production capabilities, and footprint.
• Develop back-office and system integration plans.
• Ensure reliable fleet operations and high customer satisfaction through dependable performance and responsive field support.
• Finalize plans for W56 140 kWh production launch in 2026.
• Develop an integrated plan to deliver a consolidated R&D technology and product portfolio roadmap.
• Seek to raise additional financing post-closing to drive the go-forward strategic direction.

Key Dates

Recommendation

While Workhorse's Q2 2025 results show improvements in revenue and reduced net loss, the company still faces significant financial challenges, including a gross loss and increased convertible debt. The proposed merger with Motiv Electric Trucks is a strategic move that brings substantial capital infusion, potential cost synergies, and a broader market presence, which are positive for long-term viability. However, the significant dilution for existing shareholders (26.5% ownership post-merger) and the inherent risks associated with integrating two companies, including potential regulatory delays and operational disruptions, warrant a cautious approach. A 'hold' recommendation is appropriate as the market awaits the successful completion of the merger, the realization of stated synergies, and concrete evidence of improved financial performance from the combined entity.

Keywords

Electric Vehicles, Medium-Duty Trucks, Merger, Workhorse Group, Motiv Electric Trucks, EV Manufacturing, Commercial Vehicles, Fleet Electrification, SEC Filing, WKHS