Workhorse Group (NASDAQ: WKHS) has had a tough year but it looks like the toughest times are behind them. Not only is the company moving on from the C-series issues it had last year but the new CEO appears to have the company on track to begin production this quarter. While the calendar Q2 results were lackluster, the company also received the first of the new chassis from GreenPower Motors that it will use to build the new lineup.
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The lineup is built on GreenPower Motors’ (NASDAQ: GP) EV Star cab and chassis combination and the delivery schedule should allow the company to meet its goals for the year. Workhorse Group is targeting up to 250 builds this year which some analysts view as cautious. The takeaway is that revenue is expected to blossom in the second half and production to ramp in calendar 2023. The question is if these moves are too-little, too-late for the company because Ford is moving in on the delivery truck action.
Ford To Power FedEx Delivery Services?
FedEx (NYSE: FDX) and Ford (NYSE: F) sent a ripple through the EV market when they announced a test run of Ford’s e-Transit vans. FedEx is aiming to completely electrify its fleet by 2040 which could be a windfall contract for Ford and Ford investors. The test includes 10 e-Transit vans in 9 markets focused on a range of weather and road conditions faced by FedEx’s SameDay City services. According to Brian Phillips, president, and CEO of FedEx Office, “FedEx SameDay City is a perfect use-case for testing the capabilities of the Ford E-Transit.” In regards to the size of the potential order, FedEx’s ground fleet uses more than 170,000 vehicles which could equate to more than $7.5 billion in sales over the next 18 years.
And Ford’s EV plans do not end there. The company is targeting 2 million in annual EV sales by the end of 2026 and for 50% of sales to be EV by 2030. With an annual sales average near 2 million annually that puts Ford at about 1 million in annual EV sales which is a target market leader Tesla (NASDAQ: TSLA) has already achieved. Tesla CEO Elon Musk says the company wants to sell 20 million EVs annually by 2030. The takeaway is that with potential contracts like the one with FedEx and the momentum that would build in its wake it is certain that Ford will not only outproduce Workhorse Group in terms of production but outcompete as well.
There Are Tailwinds For Workhorse Group
As bleak as the outlook may be, Workhorse Group is not out of the game yet and even has some tailwinds to support the action over the next year. The most obvious is a new purchase order for more than 1,000 vehicles over the next 18 months that includes 3 different models. There is also the US Postal Service’s decision to increase the pace of its EV purchases, an increase that could drive business for Workhorse Group, and the passage of the Inflation Reduction Act. The new bill includes not only incentives for US-made vehicles such as Workhorse Group’s trucks but added bonuses for truck makers as well.
The Technical Outlook: Workhorse Group Consolidates For A Charge
The price action in Workhorse Group shares has been volatile the last few weeks but there is one clear takeaway and that is the market has re-engaged with this stock and it looks like it will move higher. The market has confirmed a bottom at the $3 level and now support at the higher level of $3.50 which is coincident with the short-term EMA. Assuming the market can keep its feet under it, this stock could easily retest the $5.00 level in the very near term and then possibly move up to a new long-term high in the range of $6 to $7. Ford may be about to ramp production of vans but so is Workhorse Group and the demand for vans is more than they both can produce together. 
