425: Workhorse & Motiv Merge to Form EV Truck Leader

Workhorse Group Inc. and Motiv Power Systems, Inc. announce a definitive merger agreement to create a leading North American medium-duty electric truck OEM, valuing the combined entity at approximately $105 million.

Summary

• Workhorse Group Inc. (Workhorse) entered into a definitive merger agreement with Motiv Power Systems, Inc. (Motiv) on August 15, 2025, where Motiv will become an indirect, wholly-owned subsidiary of Workhorse.
• Upon closing, pre-Merger Motiv investors will initially own approximately 62.5% of the combined company, Workhorse stockholders will own approximately 26.5%, and the 2024 Note Holder will own rights representing approximately 11% on a fully-diluted basis, prior to giving effect to future equity and convertible financings.
• The transaction values the combined company at approximately $105 million.
• Motiv's financial indebtedness will be cancelled, with holders receiving Workhorse Common Stock as merger consideration.
• Workhorse completed a sale-leaseback of its Union City, Indiana manufacturing facility for $20 million, with proceeds used for debt repayment, transaction expenses, and general corporate purposes.
• Workhorse entered into a Subordinated Secured Convertible Note agreement for $5 million with an affiliate of Motiv's largest investor, bearing 8% annual interest, with proceeds also for debt repayment and general corporate purposes.
• Workhorse will redeem approximately $30.9 million of its outstanding 2024 Notes at 100% face amount plus accrued interest at closing, and the 2024 Note Holder's warrants will be exchanged for rights to acquire Workhorse Common Stock equal to 30% of fully diluted shares prior to the merger consideration issuance.
• The combined company's Board of Directors will consist of seven members, with five designated by Motiv and two by Workhorse.
• Scott Griffith, Motiv CEO, is expected to serve as CEO of the combined company, and Rick Dauch, Workhorse CEO, is expected to serve as an advisor.
• Workhorse's unexercised stock options will be cancelled for no consideration, while other unvested equity awards will accelerate in full.
• The merger is expected to close in the fourth quarter of 2025, subject to Workhorse shareholder approval and other customary closing conditions.

Sentiment

Score: 7

Explanation: The merger is a strategically positive move, addressing Workhorse's financial challenges and market position by creating a larger, more diversified entity with significant synergy potential. The immediate liquidity and debt restructuring are crucial for stability. However, the substantial dilution for existing Workhorse shareholders and the need for future capital raises introduce financial risk, balancing the overall sentiment to moderately positive.

Positives

• The merger creates a leading North American medium-duty electric truck OEM, combining Workhorse's vehicles, manufacturing capabilities, and dealer network with Motiv's product portfolio and fleet relationships.
• The combined entity is positioned for rapid innovation and scalable growth in the $23 billion medium-duty truck segment.
• Increased scale and enhanced operational efficiencies are expected to support lower unit costs and optimize total cost of ownership (TCO) for customers.
• The combined company is expected to have a strengthened financial profile with a simplified capital structure, better positioning it to raise additional capital post-close.
• Potential for at least $20 million in cost synergies by the end of 2026, through R&D, G&A, and facility cost-reductions.
• The combined companies intend to maximize common software, hardware, and IP across Class 4-6 platforms for enhanced technology and customer experience.
• Workhorse's Union City facility has the capacity to eventually produce up to 5,000 trucks per year.
• The combined company has served 10 of the largest medium-duty fleets in North America, facilitating broader adoption.
• The $20 million sale-leaseback and $5 million convertible note provide near-term liquidity to fund Workhorse's operations through closing and repay existing senior secured debt.
• Existing senior secured indebtedness will be repaid and/or cancelled at closing, simplifying the capital structure.

Negatives

• Existing Workhorse shareholders will experience significant dilution, owning approximately 26.5% of the combined company on a pro forma fully diluted basis prior to future financings.
• All unexercised and outstanding Workhorse stock options will be cancelled for no consideration.
• The transaction is subject to certain potential adjustments and additional future dilution from equity and convertible financings.
• Workhorse may be required to pay Motiv a termination fee of $1,050,000 under specified circumstances.
• Motiv may be required to pay Workhorse a termination fee of $1,750,000 under certain other circumstances.
• The success of the combined entity relies on the ability to successfully integrate businesses and technologies, achieve expected benefits and synergies, and obtain necessary regulatory and shareholder approvals.
• The combined company will seek to raise additional equity financing to fund its go-forward strategic execution, which could lead to further dilution.

Risks

• Ability of the parties to successfully integrate their businesses and technologies, which may result in the combined company not operating as effectively and efficiently as expected.
• Risk that the expected benefits and synergies of the proposed transaction may not be fully achieved in a timely manner, or at all.
• Risk associated with Workhorse's ability to obtain the approval of its shareholders required to consummate the proposed transaction and the timing of the closing.
• Risk that the conditions to the transaction are not satisfied on a timely basis or at all, or the failure of the transaction to close for any other reason or to close on the anticipated terms.
• Risk that any regulatory approval, consent or authorization that may be required for the proposed transaction is not obtained or is obtained subject to unanticipated conditions.
• Occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction.
• Unanticipated difficulties, liabilities or expenditures relating to the transaction.
• Effect of the announcement, pendency or completion of the proposed transaction on the parties' business relationships and business operations generally.
• Effect of the announcement or pendency of the proposed transaction on Workhorse's common stock prices and uncertainty as to the long-term value of the combined company's common stock.
• Risks that the proposed transaction disrupts current plans and operations of the parties and their respective management teams and potential difficulties in hiring or retaining employees.
• Ability to develop and manufacture the product portfolio, including W4 CC, W750, and W56 and other programs.
• Ability to attract and retain customers for existing and new products.
• Ongoing and anticipated changes in the U.S. political environment, including those resulting from the new Presidential Administration, control of Congress, and changes to regulatory agencies.
• Implementation of changes to the existing tariff regime by the new Presidential Administration and measures taken in response to such tariffs by foreign governments.
• Risks associated with obtaining orders and executing upon such orders.
• Unavailability, reduction, elimination or adverse application of government subsidies and incentives or any challenge to or failure by the federal government, states or other governmental entities to adopt or enforce regulations.
• Changes in attitude toward environmental, social, and governance matters among regulators, investors, and business partners.
• 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.
• General inability to raise additional capital to fund operations and business plan.
• Ability to receive sufficient proceeds from current and any 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 the listing requirements of the Nasdaq and the impact of any steps taken, including reverse splits of common stock, on operations, stock price and future access to funds.
• 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 effectiveness of cost control measures.
• 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 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 anticipates becoming a leader in the medium-duty electric truck market, leveraging increased scale, an expanded product portfolio, and enhanced operational efficiencies to achieve lower unit costs and optimize total cost of ownership for customers. It expects to strengthen its financial profile, simplify its capital structure, and be better positioned to raise additional capital post-closing to fund strategic execution. Significant cost synergies of at least $20 million are targeted by the end of 2026. The combined entity aims to achieve cost parity with internal combustion engine and diesel trucks to drive widespread adoption.

Management Comments

• Scott Griffith, CEO of Motiv, stated, '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. 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. That’s exactly what we’re focused on delivering with this merger, and with a combined more than 17 million miles under our belt, we believe the transaction will put us in a strong starting position to deliver on this vision. I’m excited by the opportunity to lead the combined company, work closely with the Motiv and Workhorse teams to capture the opportunities ahead, and deliver for our customers, our shareholders and the communities in which our trucks operate.'
• Rick Dauch, CEO of Workhorse, commented, 'This transaction represents a significant milestone for Workhorse, our customers, our stakeholders and our shareholders. 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. 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.'

Industry Context

This merger is a significant consolidation in the rapidly evolving medium-duty electric vehicle (EV) sector, aiming to create a dominant player in a market estimated at $23 billion annually. By combining Workhorse's manufacturing and dealer network with Motiv's diverse product portfolio and fleet relationships, the new entity seeks to achieve economies of scale, reduce unit costs, and accelerate the transition to zero-emission commercial vehicles. This move positions the combined company to compete more effectively against both pure-play EV manufacturers and traditional legacy OEMs by offering a more competitively priced electric alternative to gas/diesel trucks and buses on a total cost of ownership basis.

Comparison to Industry Standards

• The combined company aims to compete more effectively with the industry's pure-play electric and legacy OEMs by leveraging increased scale and enhanced operational efficiencies.
• The goal is to achieve cost parity versus internal combustion engine (ICE) and diesel trucks, offering a compelling long-term value proposition.
• The combined entity has served 10 of the largest medium-duty fleets in North America, positioning it to expand adoption through existing relationships with early scalers in the commercial EV transition.
• The Union City facility's capacity of up to 5,000 trucks per year provides a scalable manufacturing base to meet anticipated demand.

Management Changes

Corporate Governance

Related Party Transactions

• Workhorse Motor Works Inc. (a Workhorse subsidiary) sold its Union City, Indiana manufacturing facility to Mango Workhorse LLC, an affiliate of Motiv's largest investor, for $20 million in a sale-leaseback transaction.
• Workhorse issued a Subordinated Secured Convertible Note with an aggregate original principal amount of $5 million to Motive GM Holdings II LLC, an affiliate of Motiv's largest investor.
• The 2024 Note Holder, who is also a party to the Repayment Agreement, consented to the issuance of the Convertible Note, the Sale Leaseback, and the Merger and related transactions.

Stakeholder Impact

• **Shareholders (Workhorse):** Significant dilution (pro forma ownership of ~26.5%), cancellation of unexercised stock options for no consideration, but potential for long-term value creation in a stronger combined entity.
• **Shareholders (Motiv):** Motiv's controlling investor will become the majority owner (~62.5%) of the combined company, indicating a favorable outcome for their investment.
• **Employees:** New management structure with Motiv's CEO taking the helm, and Workhorse's CEO transitioning to an advisory role. Existing Workhorse executives' employment will terminate at closing, with adjusted change of control payments. Unvested equity awards for Workhorse employees will accelerate.
• **Customers:** Expected to benefit from a broader product portfolio, lower unit costs, optimized total cost of ownership, and enhanced technology baseline from the combined entity.
• **Creditors (2024 Note Holder):** Existing senior secured debt (~$30.9 million) will be repaid and/or cancelled at closing, and warrants will be exchanged for rights to acquire Workhorse common stock, providing a structured exit or continued equity exposure.
• **Creditors (Motiv Investor):** Provides new debt financing ($5 million convertible note and $20 million debt financing commitment) to the combined entity, strengthening their position as a key financial partner.

Next Steps

• Workhorse will file a preliminary Proxy Statement with the SEC relating to the Parent Stockholder Meeting.
• Workhorse will seek approval from its stockholders for the merger-related proposals, including the issuance of shares, amendment to the 2023 Long-Term Incentive Plan, amendment to Articles of Incorporation (including a reverse stock split), and authority for a reverse stock split.
• The parties will work towards obtaining Nasdaq approval for the listing of the combined corporation and the shares to be issued.
• Workhorse and Motiv will use commercially reasonable efforts to effect an equity financing for Workhorse on mutually acceptable terms.
• The transaction is expected to close in the fourth quarter of 2025, subject to Workhorse shareholder approval and other customary closing conditions.
• Workhorse will hold a joint conference call with Motiv management on August 19, 2025, to discuss the transaction and Workhorse's Q2 2025 financial results.

Key Dates

Recommendation

The merger represents a significant strategic pivot for Workhorse, addressing its financial stability and market positioning in the competitive EV sector. While the transaction offers compelling long-term growth potential through increased scale, synergies, and a simplified capital structure, existing Workhorse shareholders face substantial immediate dilution and the cancellation of unexercised options. A 'hold' recommendation is prudent for seasoned investors to observe the execution of the integration, the realization of projected synergies, and the success of future capital raises. The strategic benefits are clear, but the financial implications for current shareholders and execution risks warrant a cautious stance before a more definitive 'buy' or 'sell' decision.

Keywords

Electric Vehicles, EV, Medium-Duty Trucks, Commercial Vehicles, Merger, Acquisition, Workhorse, Motiv, OEM, Zero-Emission, Fleet Decarbonization, Sale-Leaseback, Convertible Note, Debt Restructuring, Nasdaq