8-K: Workhorse & Motiv Merge to Form EV Truck Leader

Workhorse Group Inc. and Motiv Power Systems, Inc. announced a definitive merger agreement to combine, creating a leading North American medium-duty electric truck OEM, valued at approximately $105 million.

Summary

• Workhorse Group Inc. and Motiv Power Systems, Inc. have entered into a definitive merger agreement, with Motiv becoming an indirect, wholly-owned subsidiary of Workhorse upon closing.
• Motiv's investors will initially own approximately 62.5% of the combined company on a fully-diluted basis, Workhorse stockholders will own approximately 26.5%, and the 2024 Note Holder will have rights to receive Workhorse Common Stock representing approximately 11%.
• The combined company is valued at approximately $105 million.
• Workhorse completed a sale-leaseback of its Union City, Indiana manufacturing facility for $20 million, with proceeds allocated for debt repayment and general corporate purposes.
• Workhorse entered into a $5 million Subordinated Secured Convertible Note with an affiliate of Motiv's largest investor, bearing 8% annual interest compounded quarterly, maturing by August 15, 2027.
• Workhorse will lease back the Union City facility for an initial term of 20 years, with six additional 5-year renewal options, at an annual base rent of $2,100,000 after a six-month abatement period.
• Workhorse will redeem all outstanding 2024 Notes, approximately $30.9 million, at 100% of face amount plus accrued interest.
• Existing Workhorse warrants held by the 2024 Note Holder will be exchanged for 'Rights' to acquire Workhorse Common Stock, representing 30% of fully diluted shares immediately prior to the merger closing.
• Workhorse stock options will be cancelled for no consideration, while other unvested equity awards will accelerate.
• The combined company's Board of Directors will consist of seven members, with five designated by Motiv and two by Workhorse.
• An amendment to Workhorse's Articles of Incorporation is expected to effect a reverse stock split to comply with Nasdaq listing standards.

Sentiment

Score: 7

Explanation: The merger creates a larger, more diversified entity with significant potential for synergies and market leadership in a growing sector. The immediate capital infusion and debt restructuring are positive for liquidity. However, the substantial dilution for existing Workhorse shareholders and the cancellation of stock options are notable negatives. The success hinges on effective integration and realization of projected synergies, which carry execution risk.

Positives

• Combines two innovators to create a leading North American medium-duty electric truck OEM, positioned for rapid innovation and scalable growth.
• Expected to offer a broader product portfolio and enhance operational efficiencies, leading to lower unit costs and optimized total cost of ownership for customers.
• Strengthens the combined company's financial profile with a simplified capital structure and improved financial resources to capture anticipated demand.
• Leverages Workhorse's manufacturing capabilities (Union City facility capacity up to 5,000 trucks/year) and national dealer network.
• Combines complementary customer bases, having served 10 of the largest medium-duty fleets in North America.
• Identified potential for at least $20 million in cost synergies by the end of 2026 through R&D, G&A, and facility cost-reductions.
• The $20 million sale-leaseback and $5 million convertible note provide near-term liquidity and fund debt repayment.
• All remaining indebtedness to Workhorse's existing senior secured lender, including warrants, will be repaid and/or cancelled at merger closing.
• Motiv's controlling investor will provide an additional $20 million in debt financing at closing ($10M revolving credit, $10M ABL for manufacturing).

Negatives

• Workhorse stock options are cancelled for no consideration, impacting employee equity.
• Existing Workhorse stockholders will own a minority stake (~26.5%) in the combined company, indicating significant dilution.
• The 2024 Note Holder's warrants are exchanged for 'Rights' to acquire shares, which could lead to further dilution for existing shareholders.
• The new convertible note bears 8% interest, compounded quarterly, adding to the debt burden.
• A reverse stock split is necessary to comply with Nasdaq listing standards, often indicative of a low stock price.
• Termination fees are applicable under specified circumstances ($1,050,000 for Workhorse, $1,750,000 for Motiv).

Risks

• Ability to successfully integrate businesses and technologies, potentially leading to less effective and efficient operations than expected.
• Risk that expected benefits and synergies may not be fully achieved in a timely manner, or at all.
• Potential regulatory delays or failure to obtain required approvals for the transaction.
• Unanticipated difficulties, liabilities, or expenditures related to the transaction.
• Effect of the announcement, pendency, or completion of the proposed transaction on business relationships and operations.
• Uncertainty regarding the long-term value of the combined company's common stock and potential volatility in its price.
• Difficulties in hiring or retaining employees as a result of the proposed transaction.
• Ability to develop and manufacture the product portfolio, including the W4 CC, W750, and W56 programs.
• Ability to attract and retain customers for existing and new products.
• Ongoing and anticipated changes in the U.S. political environment, including regulatory changes.
• Risks associated with obtaining orders and executing upon such orders.
• Unavailability, reduction, elimination, or adverse application of government subsidies and incentives.
• Supply chain disruptions, including constraints on steel, semiconductors, and other material inputs, and resulting cost increases.
• Limited operations and need to expand and enhance elements of the production process to fulfill product orders.
• Inability to raise additional capital to fund operations and business plan.
• Ability to receive sufficient proceeds from current and future financing arrangements to meet immediate liquidity needs and the potential costs, dilution, and restrictions resulting from any such financing.
• Ability to maintain compliance with Nasdaq listing requirements and the impact of any steps taken, including reverse splits.
• Ability to protect intellectual property.
• Market acceptance of products.
• Ability to obtain sufficient liquidity from operations and financing activities to continue as a going concern.
• Ability to control expenses and the impact such measures could have on operations, including the effects of furloughing employees.
• Potential competition, including shifts in technology.
• Volatility in and deterioration of national and international capital markets and economic conditions.
• Global and local business conditions, acts of war (including conflicts in Ukraine and the Middle East), and/or terrorism.
• Prices being charged by competitors.
• Inability to retain key members of the management team.
• Inability to satisfy customer warranty claims.
• Outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc.

Future Outlook

The combined company aims to be a leader in the medium-duty EV truck market, leveraging increased scale, an expanded product portfolio, and enhanced operational efficiencies to reduce unit costs and optimize total cost of ownership. It expects to strengthen its financial profile, simplify its capital structure, and be better positioned to raise additional capital post-close. The company anticipates achieving at least $20 million in cost synergies by the end of 2026 through R&D, G&A, and facility cost-reductions, and plans to maximize common software, hardware, and IP across its Class 4-6 platforms.

Management Comments

• "Bringing together two leading OEMs in the medium-duty space strengthens our ability to reduce the cost of electric trucks and make the total cost of ownership even more compelling." Scott Griffith, Motiv CEO
• "We believe this is a coming-of-age moment—not just for Motiv and Workhorse, but for the industry as a whole, and that widespread adoption of medium-duty electric trucks will come from achieving cost parity vs. ICE and diesel trucks and offering compelling long-term value." Scott Griffith, Motiv CEO
• "This transaction represents a significant milestone for Workhorse, our customers, our stakeholders and our shareholders." Rick Dauch, Workhorse CEO
• "By combining with Motiv and completing the related transactions, we are creating a broader product offering, strengthening our nearand long-term financial position and providing Workhorse shareholders with the opportunity to participate in the upside of a leader in the medium-duty EV commercial vehicle market." Rick Dauch, Workhorse CEO
• "We believe Motiv is the right partner to support the advancement of our combined product roadmap and capture new growth opportunities. Together, we are confident we will be even better positioned to win the commercial EV transition and create value for shareholders." Rick Dauch, Workhorse CEO

Industry Context

This merger represents a significant consolidation in the nascent but growing medium-duty electric vehicle market. It aims to create a stronger, more competitive entity by combining complementary strengths (Workhorse's manufacturing and dealer network with Motiv's diverse product portfolio and fleet relationships). The focus on achieving cost parity with internal combustion engine (ICE) and diesel trucks, and optimizing Total Cost of Ownership (TCO), reflects a key industry trend towards broader EV adoption driven by economic viability for commercial fleets. The strategic move to target early scalers in the commercial EV transition is evident through the combined entity's existing relationships with major fleets.

Comparison to Industry Standards

• The combined company aims to be a 'leader in the $23 billion medium-duty truck segment,' indicating a strategic positioning for market dominance.
• The Union City facility's estimated production capacity of 'up to 5,000 trucks per year' positions the combined entity for scalable growth, a critical factor in the capital-intensive EV manufacturing industry.
• The stated goal of 'achieving cost parity vs. ICE and diesel trucks and offering compelling long-term value' directly addresses a primary barrier to widespread EV adoption in the commercial sector, aiming to surpass current industry challenges in economic viability.
• The combined entity boasts 'more than 17 million miles under our belt' in terms of road-tested products, suggesting a significant operational track record and product maturity compared to many newer EV startups.
• The target of 'at least $20 million of cost synergies' by the end of 2026 through R&D, G&A, and facility cost-reductions indicates an aggressive pursuit of efficiency, which is crucial for profitability in the competitive EV market.

Management Changes

Corporate Governance

Legal Proceedings

• The outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc., is a potential risk factor.

Related Party Transactions

• Motiv's largest investor (Motiv Investor) is providing up to $20 million in debt financing to Workhorse at the closing of the merger.
• An affiliate of Motiv's largest investor (Mango Workhorse LLC) purchased Workhorse's Union City manufacturing facility for $20 million in a sale-leaseback transaction.
• An affiliate of Motiv's largest investor (the Convertible Note Holder) received a $5 million Subordinated Secured Convertible Note from Workhorse.
• The 2024 Note Holder, who is exchanging warrants for rights to Workhorse Common Stock, will own approximately 11% of Workhorse on a fully-diluted basis post-merger.

Stakeholder Impact

• Shareholders (Workhorse): Face significant dilution (from ~100% to ~26.5% ownership) and the cancellation of stock options for no consideration. However, they gain exposure to a larger, potentially more competitive entity with identified synergies.
• Shareholders (Motiv): Will become the majority owners (~62.5%) of a publicly traded company, gaining liquidity and market access for their investment.
• Employees (Workhorse): Experience executive leadership changes and the cancellation of stock options. Other unvested equity awards will accelerate. Potential for integration challenges and synergy-driven workforce adjustments.
• Customers: Expected to benefit from a broader product portfolio, lower unit costs, and optimized total cost of ownership for electric trucks due to increased scale and efficiencies.
• Creditors (2024 Note Holder): Their existing debt of approximately $30.9 million will be repaid, and their warrants will be exchanged for rights to acquire Workhorse equity, providing a new form of exposure.
• Creditors (Motiv Investor): Become a significant debt and equity holder in the combined entity, providing crucial financing and gaining substantial influence over the company's future direction.

Next Steps

• Workhorse to prepare and file a preliminary Proxy Statement on Schedule 14A with the SEC.
• Workhorse to hold a Parent Stockholder Meeting to obtain approval for the merger, share issuance, equity plan amendment, and reverse stock split.
• Workhorse to make an appropriate listing application to Nasdaq to maintain its listing.
• Workhorse and Motiv to use commercially reasonable efforts to effect an equity financing for Workhorse.
• Motiv's controlling investor to provide up to $20 million in debt financing at closing.
• Workhorse to redeem all outstanding 2024 Notes and exchange warrants for Rights at closing.
• The transaction is expected to close in the fourth quarter of 2025.
• Workhorse and Motiv management will hold a joint conference call on August 19, 2025, to discuss the proposed transaction and Workhorse's second quarter 2025 financial results.

Key Dates

Recommendation

This is a transformative merger for Workhorse, creating a larger entity with a stronger market position and potential for significant synergies in the growing EV truck market. The immediate capital infusion and debt restructuring are positive for liquidity. However, the substantial dilution for existing Workhorse shareholders and the cancellation of stock options are notable negatives. The success hinges on effective integration and realization of projected synergies, which carry execution risk. Given the significant changes and uncertainties, a 'hold' recommendation is appropriate for existing investors to observe the integration process and the combined company's performance. New investors should wait for more clarity on the combined entity's operational execution and financial trajectory post-merger.

Keywords

Electric Trucks, EV, Merger, Workhorse Group, Motiv Power Systems, Commercial Vehicles, Medium-Duty Trucks, Nasdaq, Sale Leaseback, Convertible Note, Corporate Governance, Shareholder Dilution, Risk Factors, Financial Restructuring, Zero-Emission Vehicles, OEM