Workhorse Group Drops Postal Service Mail Truck Lawsuit

September 15, 2021 by Jerry Hirsch, @Jerryhirsch

The new chief executive of Workhorse Group Inc. ended litigation against the U.S. Postal Service over the awarding of a large contract for new mail trucks to Oshkosh Defense.

Rick Dauch, named chief executive by the electric vehicle company’s board of directors in August, said he thinks it is better to work with the federal government rather than to contest its decisions via litigation.

“Since I joined the company six weeks ago, we have been conducting a deep and intensive overview of all aspects of our business, including an examination of the history of our USPS bid and subsequent protest filing… We believe that the best way for us to work with any governmental agency is through cooperation, not through litigation. By withdrawing our protest, we can also better focus our time and resources on initiatives that we expect will be more productive for our company,” Dauch said in a Sept. 15 news release.

The Postal Service announced Oshkosh Defense as the winner of the competition to build the mail truck in February. Under the terms of the initial deal, Oshkosh, Wisc.,-based Oshkosh received a $482 million contract to complete the production design of its mail truck offering. The agreement also provides Oshkosh funds to pay for tooling and factory configuration needed before launching production. A series of contracts are expected to top $6 billion. Oshkosh said the first new trucks will go into operation in 2023.

Workhorse tried to reverse the decision arguing that the Postal Service should have picked its electric mail truck offering.  It filed a lawsuit in the U.S. Court of Federal Claims that called the agency’s award “arbitrary, capricious, and without rational basis.”

The post office wants to replace a fleet of about 140,000 Grumman Long Life Vehicles that it uses 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. They are also prone to fires, with several hundred burning up in recent years.

Workhorse’s proposal would have provided a fleet of electric vehicles. 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 Congressional hearing earlier this year. That percentage would allow the agency to test the technology and limit the cost of installing chargers at postal facilities.

In a recent interview with Trucks.com, Dauch said he wants to refocus the Loveland, Ohio, company on the commercial vehicle market, where there is the most potential for sales.

“We basically have to take what historically has been technology startup prototype company and turn it into a real operating company with real production, real customers, real customer service and a dealer network. It’s a big transition for a company that builds one-off prototypes,” he said.

Dauch said he believes there’s still plenty of opportunities to sell electric vehicles to agencies like the Postal Service.

“These opportunities include several commercial industry markets as well as a broad array of initiatives designed to modernize and electrify government-funded and owned vehicle fleets across the country at the federal, state and city level,” Dauch said.

Dauch said the company’s most pressing issue is a redesign of its electric C1000 truck to carry heavier loads.

“I can sell a truck carrying between 3,000 and 4,000 pounds. But when you talk to companies like UPS, they want trucks for 7,000 to 8,000 pounds,” Dauch said.

He is working with the Workhorse sales team to identify the best customers, such as bakeries and packaged food companies, for the existing lighter capacity C1000. At the same time, the company’s engineers are reworking the truck’s chassis and design to carry heavier loads to have a vehicle that addresses a much larger market.

Jerry Hirsch June 23, 2021
While there are encouraging developments at electric pickup truck startup Lordstown Motors, Wall Street is still flying the caution flag for the stock.

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