Workhorse Looks to Challenge Oshkosh Mail Truck Contract

March 01, 2021 by Jerry Hirsch, @Jerryhirsch

Electric truck manufacturer Workhorse Group said it is exploring ways to challenge losing a U.S. Postal Service contract to build the next-generation mail truck.

“We intend to explore all avenues that are available to us,” said Duane Hughes, chief executive of the Loveland, Ohio, company.

The changing composition of the Postal Service’s board of governors following appointments made by the Biden administration also might favor Workhorse’s efforts to sell the post office electric mail trucks, Hughes said during a conference call with industry analysts and investors on Monday.

Biden signed an executive order directing federal officials to draw up plans to convert the federal government’s 645,000-vehicle fleet to “clean and zero-emission vehicles.”

While that includes mail trucks, the Postal Service operates as an independent agency with its own board of governors that decides how its funding is spent.

“What President Biden is doing is putting the board of governors together in such a way to support his plan going forward,” Hughes said.

Hughes has scheduled a Wednesday meeting with Postal Service officials “to understand better the decision-making process as well as any potential steps.”

Workhorse was one of several contenders for a contract expected to eventually total more than $6 billion to replace the aging fleet of mail trucks.

Last month the. Postal Service awarded a 10-year contract to Oshkosh Defense to produce the next mail truck. The Postal Service said the program would launch “the most dramatic modernization of the USPS fleet in three decades.”

Under the terms of the deal, Oshkosh, Wisc.,-based Oshkosh will get a $482 million contract to complete the production design of what the Postal Service is calling the “Next Generation Delivery Vehicle.” The agreement also provides Oshkosh funds to pay for tooling and factory configuration needed before launching production.

The post office now uses about 140,000 Grumman Long Life Vehicles for its main delivery service. Manufactured from 1987 through 1994, they need to be replaced. A 2014 audit from the USPS inspector’s office found that the current fleet could only meet the agency’s delivery needs through the 2017 fiscal year.

Although the Postal Service has considered using electric vehicles for its new fleet, just 10 percent of the vehicles in the Oshkosh contract would be electric, Postmaster General Louis DeJoy said at a recent Congressional hearing.

He said the cost of buying an all-electric fleet and adding infrastructure to post office facilities to keep the vehicles charge would be too expensive.

But electric vehicle proponents noted that such trucks have far less maintenance and fueling expenses than internal combustion vehicles. The agency will eventually have to add charging infrastructure as states such as California begin to phase out gas trucks.

Oshkosh said it has a plan to convert internal combustion trucks to electric vehicles over the course of service in the post office’s fleet.

Workhorse, which is just beginning to turn out electric commercial vehicles, said its offering was best suited for the type of routes the Postal Service operates.

“It’s going to stop many, hundreds of times throughout that [daily] duty cycle and that puts a lot of different demands on a vehicle,” Hughes said.

Following the contract’s award to Oshkosh, Workhorse shares fell by about 50%, and they have not recovered.

But Hughes said the company has good prospects outside of the Postal Service contract as California and New York approve subsidies for its electric trucks and it grows its production capacity and sales channel.

Workhorse is also working with UPS to test a truck-based drone package delivery system.

“I’ve always said that with or without the post office, we have a business and we have to focus on building that business,” Hughes said.

Jerry Hirsch August 31, 2020
The earliest new mail delivery trucks will replace the U.S. Postal Service's aging and troubled fleet is January 2022, according to a new report by the service’s Office of the Inspector General.

13 Responses

  1. Derek

    Good.
    I’m hopeful this gets overturned.
    Clearly some behind the scenes funny business went on here.

    Reply
    • K

      Like what? The funny business is not clear to me. The USPS picked the most appropriate product. This contract went through years of evaluation and testing.

      Reply
      • Derek

        well, yes & no. Oshkosh changed their design right before they were chosen.
        EV’s make so much sense when it comes to stop & go, which is what these vehicles do all the time.
        A big Defense contractor has far more lobbying power/money then little ol’ Workhorse.

    • Randy

      You are making an assumption based on stock pictures that the design was changed. Facts?

      Reply
  2. Kieran

    Please reach out to legislators. An electric fleet vehicle company is much better suited to build their electric vehicle fleet than a large niche military vehicle maker! Business as usual for oil lobbyists?

    Reply
    • Randall Rynearson

      Some Facts

      Oshkosh brands… Pierce (Fire Trucks) Jerr-Dan (Wreckers/Rotators) McNeilus (Refuse vehicles and Cement Mixers) Frontline (News Vans and Command /Control) JLG (Access Equipment) IMT (Service Vehicles and Truck Mounted Cranes) Oshkosh Airport Products (Airport Fire and Rescue, Snow Removal Equipment) Corvette Racing (Cool Fast Cars acquired with the Purchase of Pratt Miller) Oshkosh Defense (FMTV,MATV and JLTV vehicles that “Yes” are Armored not “stamped variable thickness sheet metal”)

      Just Great Products in each of their area of expertise not Just a “Defense Contractor”, and they share engineering resources to accomplish it.

      Oh, they made a $25 Million strategic investment in “Microvast”. They design and produce the correct electrification solutions for the size and purpose of specific vehicles.

      Total cost of ownership was included in the USPS request. I assume the Postmaster used it in the decision making process.

      All public information anyone can research (if they want to ).

      Reply
    • k

      Large Niche military vehicle maker? I suggest you do a quick google Search of Oshkosh Corp.

      Reply
  3. Alex

    Challenges to federal contract awards happen all the time. It would be more unusual for a challenge to not happen. Bidders frequently have the challenges written up before the award just in case they’re not selected.

    Reply
  4. Mape

    I’m confident it will get overturned, electric for local deliveries is at a different level way up

    Reply
    • Rynearson

      I seem to remember Lockheed Martin suing when Oshkosh Defense was granted the JLTV contract (half have been delivered to date). That is until the test results were released showing a large disparity between the capabilities and quality.

      Reply
  5. L Kimura

    Workhorse lost because the USPS added the cost of the charging infrastructure to their bid making them more expensive than Oshkosh. This is unfair as it assumes the USPS would never have needed this charging equipment if it hadn’t selected Workhorse. Of course this begs the question of what do they plan to use when Oshkosh retrofits their ICE vehicles to be EVs. In the investor presentation held a few days ago Workhorse seemed to believe an unduly high number was used, possibly because the USPS used cost figures for Level 3 high capacity DC fast charging instead of the far less expensive 240 volt Level 2 or even 120 volt Level 1 chargers which could adequately satisfy the charging necessary since the majority of routes are less than 40 miles.

    I would love to see the USPS’s life cycle cost analysis for the three competitors for this contract. I can’t see how the Operations & Maintenance cost of an ICE could come close to that of an EV platform. This number gets even worse if the tax payers have to fund Oshkosh to perform the research and development necessary to retro fit 10% of the fleet.

    I not only think this contract should be investigated and possibly be overturned due to the above irregularities, I think if Oshkosh fails to cooperate the Administration should reconsider Oshkosh participation in US military contracts.

    Reply
    • Rynearson

      I read some complaints in some of the Chats “doesn’t the government know that it snows” and “4/all wheel drive was being ignored”…. All without factual basis. I am sure those making decisions are looking at total cost of ownership what makes sense do we get EV’s with a charging station each? or do we get shared charging stations? and if so do we need someone to change the plug or will it cascade to Multiple vehicles without user intervention? Do post offices in Montana need electric? or can electric even work there?.. So many different solutions and yes it will/would be great to see the rationale behind the decision. Making statements like this without the details seems a bit rehearsed.

      Reply
  6. Brandon

    Boy! Wish I could lawyer up and sue the client every time I lost a bid!

    Reply

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