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Workhorse Group applies for $250M loan from DOE Advanced Technology Vehicles Manufacturing (ATVM) Loan Program

Workhorse Group Inc., the developer of a plug-in electric pickup truck (earlier post), has applied for a $250-million loan from the Department of Energy’s (DOE) Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. The company also announced that DOE has deemed its application to be substantially complete for purposes of DOE beginning its preliminary evaluation of the technical, financial, legal and other aspects of the application.

There are a significant number of additional milestones Workhorse will need to achieve in order to progress its application towards a conditional commitment and any final loan agreement.

Workhorse is pursuing the ATVM loan, as well as other sources of financing, in order to equip its manufacturing plant in Union City, Indiana, for the production of the W-15 four-wheel drive plug-in electric pickup truck. Workhorse CEO and President Stephen Burns said that the company has received letters of intent to purchase more than 5,000 W-15s.

The ATVM program makes direct loans to re-equip, expand or establish manufacturing facilities in the United States to produce qualifying light-duty vehicles or components that provide meaningful improvements in fuel economy performance in accordance with applicable laws and regulations. The program has issued loans for projects run by Tesla, Ford and Nissan.

Although President Trump’s America First – A Budget Blueprint to Make America Great Again, dated 16 March 2017, proposed to eliminate the ATVM program, its long-term future is subject to congressional action on Fiscal Year 2018 appropriations.



How can Workhorse possibly qualify for this loan? Current trailing twelve month (ttm) revenues are about $8M, and won't get materially better over the next couple of quarters at least. For EBITDA and Operating Cash Use, respectively, ttm metrics are roughly -$36M and -$34M. The only way they have stayed solvent over the last five years is share issuances, and they're presently doing them at a twice/year pace. ATVM rules don't permit the Agency to issue loans to such a weak enterprise.

This would have the look of a Solyndra Redux (or Fisker or A123 or whatever boondoggle you'd like to insert). Not gonna happen.

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