DEFA14A: Workhorse Q3 2025: Motiv Merger, Financials & EV Outlook

Workhorse Group Inc. details its Q3 2025 financial results, strategic merger with Motiv Power Systems, and future product roadmap.

Summary

• Workhorse Group Inc. filed definitive additional materials related to its Agreement and Plan of Merger with Motiv Power Systems, Inc., dated August 15, 2025.
• The filing also covers the Q3 2025 Earnings Call held on November 11, 2025, and solicits votes for the upcoming Annual Meeting on November 12, 2025.
• Q3 2025 revenue was $2.4 million, a slight decrease from $2.5 million in Q3 2024.
• Cost of sales increased to $10.1 million in Q3 2025 from $6.6 million in Q3 2024, primarily due to a $3.3 million increase in inventory excess and obsolescence reserve.
• Gross loss widened to $(7.7) million in Q3 2025 from $(4.1) million in Q3 2024.
• Operating expenses decreased by approximately $1.2 million year-over-year in Q3 2025, driven by lower R&D and employee compensation, despite increased consulting and legal fees related to the merger.
• Net loss for Q3 2025 was $(7.8) million, a significant improvement from $(25.1) million in Q3 2024, largely due to a $13.8 million gain on sale of assets and $4.8 million in other income.
• Cash and cash equivalents, including restricted cash, stood at $38.2 million as of September 30, 2025.
• The company completed a $20 million sale-leaseback of its Union City facility and secured $5 million in convertible note financing.

Sentiment

Score: 4

Explanation: While the strategic merger with Motiv and efforts to reduce operating expenses are positive developments, the core Q3 2025 financial performance shows a decline in revenue, a significant increase in cost of sales due to inventory reserves, and a widening gross loss. The improved net loss is primarily attributable to a one-time gain on asset sale and other income, masking underlying operational challenges. The company continues to face liquidity and capital raising needs, and the success of the merger integration is a significant forward-looking risk.

Positives

• Strategic merger agreement with Motiv Power Systems to create a leading North American medium-duty commercial EV OEM, broadening the product portfolio and aiming for lower unit costs.
• Strengthening near-term financial position through a $20 million sale-leaseback of the Union City facility and $5 million convertible note financing.
• Simplified capital structure by repaying/cancelling senior secured debt and associated warrants.
• The combined company is expected to be able to access up to $20 million in additional debt financing post-close of the merger.
• Reduced operating expenses by approximately $1.2 million in Q3 2025 year-over-year and $17.5 million year-to-date year-over-year through disciplined cost management.
• Completed the sale of 15 trucks in Q3 2025, with positive customer feedback driving repeat business and new orders.
• The W56 step van is eligible for up to $85,000 in base incentives per vehicle through California HVIP.
• Advancing product flexibility with the integration, testing, and validation of the Utilimaster Aeromaster walk-in van body and development of a cost-effective W56 140 kWh battery model.
• Net loss significantly improved to $(7.8) million in Q3 2025 from $(25.1) million in Q3 2024, primarily due to a gain on sale of assets and other income.

Negatives

• Q3 2025 revenue decreased slightly to $2.4 million from $2.5 million in Q3 2024, primarily due to lower sales of fewer trucks.
• Cost of sales increased significantly to $10.1 million in Q3 2025 from $6.6 million in Q3 2024, mainly due to a $3.3 million increase in inventory excess and obsolescence reserve.
• Gross loss widened to $(7.7) million in Q3 2025 from $(4.1) million in Q3 2024.
• Selling, general and administrative expenses increased by $0.1 million in Q3 2025, driven by a $3.6 million increase in consulting and legal expenses related to the merger agreement.
• Net loss per share was $(0.50) in Q3 2025, compared to $(19.00) in Q3 2024 (adjusted for reverse stock splits).
• Accumulated deficit increased to $(896.6) million as of September 30, 2025, from $(853.4) million as of December 31, 2024.
• Total stockholders' equity decreased to $32.1 million as of September 30, 2025, from $44.3 million as of December 31, 2024.
• Warrant liability at fair value increased to $9.98 million as of September 30, 2025, from $5.78 million as of December 31, 2024.
• Convertible notes at fair value increased to $27.1 million (current) and $5.1 million (long-term) as of September 30, 2025, from $10.5 million (current) as of December 31, 2024.

Risks

• Inability to successfully integrate businesses and technologies of Workhorse and Motiv, potentially leading to less effective and efficient combined operations.
• Risk that expected benefits and synergies of the proposed transaction may not be fully achieved in a timely manner, or at all.
• Inability to obtain shareholder approval for the proposed transaction or failure to satisfy closing conditions in a timely manner.
• Risk that required regulatory approvals, consents, or authorizations are not obtained or are subject to unanticipated conditions.
• Occurrence of any event, change, or circumstance that could lead to the termination of the proposed transaction.
• Unanticipated difficulties, liabilities, or expenditures related to the transaction.
• Negative 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 disruption to current plans and operations.
• Difficulties in hiring or retaining employees due to the proposed transaction.
• Ability to develop and manufacture the product portfolio, including the 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 related to the Presidential Administration, Congress, and regulatory agencies.
• Implementation of changes to the existing tariff regime and foreign government responses.
• Risks associated with obtaining and executing orders.
• Unavailability, reduction, elimination, or adverse application of government subsidies and incentives, or failure of governmental entities to adopt or enforce regulations like California Air Resource Board's Advanced Clean Fleet regulation.
• 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, leading to cost increases.
• Limited operations and need to expand and enhance production processes to fulfill product orders.
• General 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 potential costs, dilution, and restrictions from such financing.
• Ability to maintain compliance with Nasdaq listing requirements and the impact of reverse stock splits 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 impact of cost control measures, including employee furloughs.
• 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.
• Ability to realize the benefits of the sale and leaseback transaction of the Union City Facility.

Future Outlook

The company anticipates closing the merger transaction with Motiv Power Systems and associated financing commitment in Q4 2025, subject to shareholder approval and customary closing conditions. It plans to finalize production launch plans for the W56 140 kWh model in 2026 and continue developing an integrated R&D technology and combined product portfolio roadmap. The merger is expected to create a leading North American medium-duty commercial EV OEM, offering a broader portfolio at lower unit costs and enhancing operational scale and cost synergies.

Management Comments

• Rick Dauch (CEO, Workhorse): "Positioned to create long-term shareholder value by offering broader portfolio of high performing commercial EVs at lower unit costs in sizeable, high-growth medium-duty truck market."
• Rick Dauch (CEO, Workhorse): "Shareholders have opportunity to participate in potential upside of combined company."
• Management emphasizes "disciplined cost management" and "focus on cash conservation while executing key deliveries and advancing the product roadmap."
• Management highlights "continued efforts to convert finished goods inventory into cash."

Industry Context

The proposed merger with Motiv Power Systems is positioned to create a leading North American medium-duty commercial EV OEM. This move aims to capitalize on the growing demand for electric commercial vehicles by offering a broader product portfolio (Class 4 cab chassis, Class 5 and 6 step vans, and future Class 5 and 6 cab chassis) and achieving enhanced operational scale and cost synergies. This strategy is designed to provide a competitively advantaged offering against both pure-play electric and legacy OEM internal combustion engine trucks and buses, particularly on a Total Cost of Ownership (TCO) basis, in a high-growth market. The eligibility of the W56 step van for California HVIP incentives also underscores the importance of regulatory support in the EV sector.

Comparison to Industry Standards

• The filing states the combined company will have an "enhanced operational scale, cost synergies and competitively advantaged offering relative to pure-play electric, legacy OEMs and gas/diesel trucks and buses on a TCO basis." However, it does not provide specific comparable companies, projects, or results to benchmark against.

Corporate Governance

Legal Proceedings

• Mention of "the outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc." as a risk factor, with no new details or updates provided in the filing.

Stakeholder Impact

• Shareholders: Opportunity to participate in the potential upside of the combined company; urged to vote on merger-related proposals; potential dilution and restrictions from future financing; uncertainty regarding long-term stock value.
• Employees: Potential difficulties in hiring or retaining employees as a result of the proposed transaction; impact of cost control measures, including potential furloughs.
• Customers: Expected broader portfolio of high-performing commercial EVs; reliable fleet operations and high customer satisfaction through dependable performance and responsive field support.
• Suppliers: Potential supply chain disruptions and resulting cost increases.
• Creditors: Simplified capital structure through repayment/cancellation of senior secured debt; access to additional debt financing post-merger.

Next Steps

• Shareholders to vote on all proposals for the Annual Meeting by November 11, 2025 (11:59 PM ET).
• Attend the Annual Meeting virtually on November 12, 2025.
• Close the merger transaction with Motiv and associated financing commitment in Q4 2025, subject to customary closing conditions and shareholder approval.
• Fulfill existing fleet purchase orders.
• Continue to convert finished goods inventory into cash.
• Reduce operating costs and improve working capital needs.
• Ensure reliable fleet operations and high customer satisfaction.
• Finalize plans for W56 140 kWh production launch in 2026.
• Continue developing an integrated plan to deliver consolidated R&D technology and a combined product portfolio roadmap.

Key Dates

Recommendation

While the strategic merger with Motiv Power Systems offers a potential long-term growth avenue and the company has taken steps to improve liquidity through asset sales and convertible notes, the underlying operational performance in Q3 2025 remains weak. Revenue declined, cost of sales significantly increased due to inventory obsolescence, and the gross loss widened. The improved net loss was primarily driven by non-operational gains, masking continued operational challenges. The company faces substantial risks related to merger integration, capital raising, and market acceptance of its products. Given the persistent operational losses, reliance on one-time gains, and the inherent uncertainties of a merger in a competitive and capital-intensive industry, a seasoned investor would likely view the stock as a high-risk proposition with significant downside potential in the near to medium term.

Keywords

Workhorse Group, Motiv Power Systems, EV, Electric Vehicles, Commercial Vehicles, Medium-Duty Trucks, Merger, Acquisition, Q3 2025 Earnings, Financial Results, SEC Filing, Proxy Statement, Shareholder Meeting, Corporate Governance, Risk Factors, Supply Chain, Government Incentives, W56, W4 CC, W750, Capital Raise, Liquidity, Nasdaq