DEFA14A: Workhorse Q3 2025 Results & Motiv Merger Update

Workhorse Group reported third-quarter 2025 financial results, including a reduced net loss, and provided updates on its proposed merger with Motiv Electric Trucks.

Summary

• Reported a net loss of $7.8 million for Q3 2025, a significant improvement from a $25.1 million net loss in Q3 2024.
• Sales for Q3 2025 were $2.4 million, a slight decrease from $2.5 million in Q3 2024, primarily due to fewer truck sales offset by deferred revenue recognition.
• Completed the sale of 15 trucks (Class 4 and 5 versions) during the third quarter.
• Operating expenses decreased by $1.2 million year-over-year in Q3 2025 and $17.5 million for the nine-month period compared to 2024.
• Secured approximately $25 million in funding from Motiv's controlling investor, including a $20 million sale-leaseback transaction and a $5 million secured convertible note.
• The proposed merger with Motiv Electric Trucks is expected to close in Q4 2025, aiming to create a leading North American medium-duty electric truck OEM.
• At the merger's closing, all existing senior secured lender indebtedness and warrants will be repaid or cancelled.
• A condition to the merger closing is up to $20 million in additional debt financing from Motiv's largest investor affiliates, comprising a $10 million revolving credit facility and a $10 million ABL facility.
• The W56 platform continues to demonstrate reliability with over 42 vehicles operating in customer fleets, achieving 97% uptime.
• Completed integration, testing, and validation of the Utilimaster Aeromaster body for the W56 Class 5/6 step van.

Sentiment

Score: 7

Explanation: While sales slightly declined and gross loss widened, the substantial reduction in net loss, significant decrease in operating expenses, and the strategic merger with Motiv, which brings substantial funding and a simplified capital structure, indicate a positive trajectory for the company. The operational performance of the W56 platform also adds confidence.

Positives

• Net loss significantly reduced to $7.8 million in Q3 2025 from $25.1 million in Q3 2024.
• Operating expenses decreased by $1.2 million year-over-year in Q3 2025 and $17.5 million for the nine-month period compared to 2024, demonstrating effective cost control.
• Secured $25 million in funding from Motiv's controlling investor, improving liquidity.
• The proposed merger with Motiv is on track for a Q4 2025 closing, expected to simplify the capital structure and provide additional liquidity.
• The W56 platform shows strong real-world performance with over 42 vehicles in customer fleets and 97% uptime.
• Successful integration of the Utilimaster Aeromaster body expands the W56 product line's flexibility and market appeal.
• Interest expense, net, decreased significantly to $0.2 million in Q3 2025 from $3.0 million in Q3 2024.
• Recognized a $13.8 million gain on the sale of assets, primarily from the Union City Facility sale-leaseback.
• Recognized a $4.8 million gain related to deferred revenue upon termination of the Tropos Assembly Services Agreement.
• Cash and cash equivalents increased to $12.7 million as of September 30, 2025, from $4.1 million at December 31, 2024.
• Restricted cash increased to $25.5 million as of September 30, 2025, from $0.5 million at December 31, 2024.

Negatives

• Sales for Q3 2025 decreased slightly to $2.4 million from $2.5 million in Q3 2024, primarily due to fewer truck sales.
• Cost of sales increased by $3.5 million to $10.1 million in Q3 2025, 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.
• Loss from operations increased to $16.6 million in Q3 2025 from $14.2 million in Q3 2024.
• Warrant liability at fair value increased to $10.0 million as of September 30, 2025, from $5.8 million at December 31, 2024.
• Convertible notes at fair value (current portion) increased to $27.1 million as of September 30, 2025, from $10.5 million at December 31, 2024.
• Total liabilities significantly increased to $84.7 million as of September 30, 2025, from $49.6 million at December 31, 2024.
• Total stockholders' equity decreased to $32.1 million as of September 30, 2025, from $44.3 million at December 31, 2024.
• A $1.4 million fair value net loss was recorded on the conversion of $19.0 million in principal from the existing senior secured lender into Common Stock.
• A $6.8 million net fair value loss was recorded related to the 2024 Warrants in Q3 2025.

Risks

• Inability to successfully integrate businesses and technologies with Motiv, potentially leading to 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.
• Inability to obtain shareholder approval for the proposed transaction or failure to satisfy closing conditions on a timely basis or at all.
• Failure of the transaction to close for any reason or to close on the anticipated terms.
• Regulatory approval, consent, or authorization for the proposed transaction may not be obtained or may be obtained 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 Workhorse's common stock prices.
• Risks that the proposed transaction disrupts current plans and operations and creates difficulties in hiring or retaining employees.
• 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 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 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 challenges to regulations like the 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, and resulting cost increases.
• Ability to capitalize on opportunities to deliver products to meet customer requirements.
• 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 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 steps taken, including 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 effectiveness of cost control measures, including 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 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 the proposed merger with Motiv Electric Trucks will close in the fourth quarter of 2025, creating a leading North American medium-duty electric truck OEM. This transaction is expected to provide a simplified capital structure and near-term liquidity, supporting operations and strengthening the financial position. Management is confident in generating additional purchase orders and revenue, building on the demonstrated reliability and performance of its W56 platform and expanded application options.

Management Comments

• "We continue to make important progress on our product roadmap at Workhorse."
• "This exciting new offering will enable us to deliver the performance and reliability of our step van in the traditional form factor that fleet operators already know and trust."
• "We are focused on completing our proposed transaction with Motiv to create a leading North American medium-duty electric truck OEM."
• "We are confident that this transaction will provide our shareholders with the opportunity to participate in the potential upside of the combined company, with a significant ownership stake."
• "Our proposed transaction with Motiv will provide Workhorse with a simplified capital structure and the near-term liquidity to support our operations through the proposed transaction close."
• "We continue to take additional steps to extend our financial runway and efficiently manage our cash flow by reducing operating costs and improving working capital needs."
• "We are confident in our ability to generate additional purchase orders and revenue from our customers while strengthening our financial position, and we look forward to completing the proposed transaction with Motiv."

Industry Context

The announcement highlights Workhorse's continued efforts in the rapidly evolving zero-emission commercial vehicle market, particularly for last-mile delivery and medium-duty operations. The strategic merger with Motiv Electric Trucks positions the combined entity to become a significant player in the North American medium-duty EV segment, capitalizing on the long-term industry trend towards electrification. The focus on product enhancements like the Utilimaster Aeromaster body for the W56 platform addresses fleet operators' needs for flexibility and traditional form factors, which is crucial for broader market adoption in a competitive landscape with established internal combustion engine (ICE) vehicle manufacturers and emerging EV competitors. The mention of government subsidies and regulations like CARB's Advanced Clean Fleet regulation underscores the regulatory tailwinds and potential incentives driving industry growth, but also the risks associated with their availability.

Comparison to Industry Standards

• The W56 platform vehicles delivered 97% uptime in daily last-mile operations. While no specific comparable companies or projects are named in the filing, a 97% uptime is generally considered a very good operational performance for commercial vehicles, especially for new electric vehicle technology, and would compare favorably to industry benchmarks for fleet reliability.

Stakeholder Impact

• Shareholders: Urged to vote on the merger, potential for upside in the combined company, impact on common stock prices and long-term value of combined company's common stock, potential dilution from financing arrangements, impact of reverse stock splits.
• Employees: Potential difficulties in hiring or retaining employees as a result of the proposed transaction, effects of furloughing employees (mentioned as a risk).
• Customers: Continued delivery of W56 vehicles, enhanced flexibility with new body options, focus on meeting customer requirements and generating purchase orders.
• Creditors: Existing senior secured lender's notes and warrants will be repaid/cancelled at merger closing. New secured convertible note and potential debt financing from Motiv's investor affiliates.

Next Steps

• Shareholders to vote on the proposed merger with Motiv and other proposals at the Annual Meeting on November 12, 2025.
• Completion of the proposed merger transaction with Motiv, expected in Q4 2025.
• Finalization of terms for the up to $20 million debt financing from Motiv's largest investor affiliates.
• Continue discussions to build additional order interest through the expansive dealer network.
• Generate additional purchase orders and revenue from customers.

Key Dates

Recommendation

The company is undergoing a significant strategic transformation with the proposed merger with Motiv, which is expected to close soon and bring much-needed liquidity and a simplified capital structure. While the Q3 results show an improved net loss and cost control, operational sales remain low, and the gross loss widened. The future performance is heavily reliant on the successful integration of the merger and the realization of its anticipated benefits, as well as the ability to scale production and secure more orders. Given the ongoing transition and the inherent risks associated with mergers and early-stage EV manufacturing, a "hold" recommendation is appropriate. Investors should monitor the merger's completion, integration progress, and subsequent financial performance before making further investment decisions. The current situation presents both significant upside potential from the merger and considerable execution risks.

Keywords

Electric Vehicles, Commercial Vehicles, Last-Mile Delivery, EV Trucks, Workhorse Group, Motiv Electric Trucks, Merger, Q3 Earnings, Financial Results, W56 Step Van, Zero-Emission, Supply Chain, Corporate Governance, Nasdaq